PART IV—CREDITS AGAINST TAX
Editorial Notes
Amendments
2017—
2009—
2008—
2005—
1996—
1990—
1984—
1977—
1971—
Subpart A—Nonrefundable Personal Credits
Editorial Notes
Amendments
2022—
2018—
2010—
2005—
2001—
1998—
1997—
1996—
1990—
1986—
1984—
1983—
1982—
1981—
1980—
1978—
1977—
1976—
1975—
1971—
1970—
1965—
1964—
1962—
§21. Expenses for household and dependent care services necessary for gainful employment
(a) Allowance of credit
(1) In general
In the case of an individual for which there are 1 or more qualifying individuals (as defined in subsection (b)(1)) with respect to such individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable percentage of the employment-related expenses (as defined in subsection (b)(2)) paid by such individual during the taxable year.
(2) Applicable percentage defined
For purposes of paragraph (1), the term "applicable percentage" means 35 percent reduced (but not below 20 percent) by 1 percentage point for each $2,000 (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable year exceeds $15,000.
(b) Definitions of qualifying individual and employment-related expenses
For purposes of this section—
(1) Qualifying individual
The term "qualifying individual" means—
(A) a dependent of the taxpayer (as defined in section 152(a)(1)) who has not attained age 13,
(B) a dependent of the taxpayer (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B)) who is physically or mentally incapable of caring for himself or herself and who has the same principal place of abode as the taxpayer for more than one-half of such taxable year, or
(C) the spouse of the taxpayer, if the spouse is physically or mentally incapable of caring for himself or herself and who has the same principal place of abode as the taxpayer for more than one-half of such taxable year.
(2) Employment-related expenses
(A) In general
The term "employment-related expenses" means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be gainfully employed for any period for which there are 1 or more qualifying individuals with respect to the taxpayer:
(i) expenses for household services, and
(ii) expenses for the care of a qualifying individual.
Such term shall not include any amount paid for services outside the taxpayer's household at a camp where the qualifying individual stays overnight.
(B) Exception
Employment-related expenses described in subparagraph (A) which are incurred for services outside the taxpayer's household shall be taken into account only if incurred for the care of—
(i) a qualifying individual described in paragraph (1)(A), or
(ii) a qualifying individual (not described in paragraph (1)(A)) who regularly spends at least 8 hours each day in the taxpayer's household.
(C) Dependent care centers
Employment-related expenses described in subparagraph (A) which are incurred for services provided outside the taxpayer's household by a dependent care center (as defined in subparagraph (D)) shall be taken into account only if—
(i) such center complies with all applicable laws and regulations of a State or unit of local government, and
(ii) the requirements of subparagraph (B) are met.
(D) Dependent care center defined
For purposes of this paragraph, the term "dependent care center" means any facility which—
(i) provides care for more than six individuals (other than individuals who reside at the facility), and
(ii) receives a fee, payment, or grant for providing services for any of the individuals (regardless of whether such facility is operated for profit).
(c) Dollar limit on amount creditable
The amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed—
(1) $3,000 if there is 1 qualifying individual with respect to the taxpayer for such taxable year, or
(2) $6,000 if there are 2 or more qualifying individuals with respect to the taxpayer for such taxable year.
The amount determined under paragraph (1) or (2) (whichever is applicable) shall be reduced by the aggregate amount excludable from gross income under section 129 for the taxable year.
(d) Earned income limitation
(1) In general
Except as otherwise provided in this subsection, the amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed—
(A) in the case of an individual who is not married at the close of such year, such individual's earned income for such year, or
(B) in the case of an individual who is married at the close of such year, the lesser of such individual's earned income or the earned income of his spouse for such year.
(2) Special rule for spouse who is a student or incapable of caring for himself
In the case of a spouse who is a student or a qualifying individual described in subsection (b)(1)(C), for purposes of paragraph (1), such spouse shall be deemed for each month during which such spouse is a full-time student at an educational institution, or is such a qualifying individual, to be gainfully employed and to have earned income of not less than—
(A) $250 if subsection (c)(1) applies for the taxable year, or
(B) $500 if subsection (c)(2) applies for the taxable year.
In the case of any husband and wife, this paragraph shall apply with respect to only one spouse for any one month.
(e) Special rules
For purposes of this section—
(1) Place of abode
An individual shall not be treated as having the same principal place of abode of the taxpayer if at any time during the taxable year of the taxpayer the relationship between the individual and the taxpayer is in violation of local law.
(2) Married couples must file joint return
If the taxpayer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and his spouse file a joint return for the taxable year.
(3) Marital status
An individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married.
(4) Certain married individuals living apart
If—
(A) an individual who is married and who files a separate return—
(i) maintains as his home a household which constitutes for more than one-half of the taxable year the principal place of abode of a qualifying individual, and
(ii) furnishes over half of the cost of maintaining such household during the taxable year, and
(B) during the last 6 months of such taxable year such individual's spouse is not a member of such household,
such individual shall not be considered as married.
(5) Special dependency test in case of divorced parents, etc.
If—
(A) section 152(e) applies to any child with respect to any calendar year, and
(B) such child is under the age of 13 or is physically or mentally incapable of caring for himself,
in the case of any taxable year beginning in such calendar year, such child shall be treated as a qualifying individual described in subparagraph (A) or (B) of subsection (b)(1) (whichever is appropriate) with respect to the custodial parent (as defined in section 152(e)(4)(A)), and shall not be treated as a qualifying individual with respect to the noncustodial parent.
(6) Payments to related individuals
No credit shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual—
(A) with respect to whom, for the taxable year, a deduction under section 151(c) (relating to deduction for personal exemptions for dependents) is allowable either to the taxpayer or his spouse, or
(B) who is a child of the taxpayer (within the meaning of section 152(f)(1)) who has not attained the age of 19 at the close of the taxable year.
For purposes of this paragraph, the term "taxable year" means the taxable year of the taxpayer in which the service is performed.
(7) Student
The term "student" means an individual who during each of 5 calendar months during the taxable year is a full-time student at an educational organization.
(8) Educational organization
The term "educational organization" means an educational organization described in section 170(b)(1)(A)(ii).
(9) Identifying information required with respect to service provider
No credit shall be allowed under subsection (a) for any amount paid to any person unless—
(A) the name, address, and taxpayer identification number of such person are included on the return claiming the credit, or
(B) if such person is an organization described in section 501(c)(3) and exempt from tax under section 501(a), the name and address of such person are included on the return claiming the credit.
In the case of a failure to provide the information required under the preceding sentence, the preceding sentence shall not apply if it is shown that the taxpayer exercised due diligence in attempting to provide the information so required.
(10) Identifying information required with respect to qualifying individuals
No credit shall be allowed under this section with respect to any qualifying individual unless the TIN of such individual is included on the return claiming the credit.
(f) Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.
(g) Special rules for 2021
In the case of any taxable year beginning after December 31, 2020, and before January 1, 2022—
(1) Credit made refundable
If the taxpayer (in the case of a joint return, either spouse) has a principal place of abode in the United States (determined as provided in section 32) for more than one-half of the taxable year, the credit allowed under subsection (a) shall be treated as a credit allowed under subpart C (and not allowed under this subpart).
(2) Increase in dollar limit on amount creditable
Subsection (c) shall be applied—
(A) by substituting "$8,000" for "$3,000" in paragraph (1) thereof, and
(B) by substituting "$16,000" for "$6,000" in paragraph (2) thereof.
(3) Increase in applicable percentage
Subsection (a)(2) shall be applied—
(A) by substituting "50 percent" for "35 percent", and
(B) by substituting "$125,000" for "$15,000".
(4) Application of phaseout to high income individuals
(A) In general
Subsection (a)(2) shall be applied by substituting "the phaseout percentage" for "20 percent".
(B) Phaseout percentage
The term "phaseout percentage" means 20 percent reduced (but not below zero) by 1 percentage point for each $2,000 (or fraction thereof) by which the taxpayer's adjusted gross income for the taxable year exceeds $400,000.
(h) Application of credit in possessions
(1) Payment to possessions with mirror code tax systems
The Secretary shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of this section (determined without regard to this subsection) with respect to taxable years beginning in or with 2021. Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.
(2) Payments to other possessions
The Secretary shall pay to each possession of the United States which does not have a mirror code tax system amounts estimated by the Secretary as being equal to the aggregate benefits that would have been provided to residents of such possession by reason of this section with respect to taxable years beginning in or with 2021 if a mirror code tax system had been in effect in such possession. The preceding sentence shall not apply unless the respective possession has a plan, which has been approved by the Secretary, under which such possession will promptly distribute such payments to its residents.
(3) Coordination with credit allowed against United States income taxes
In the case of any taxable year beginning in or with 2021, no credit shall be allowed under this section to any individual—
(A) to whom a credit is allowable against taxes imposed by a possession with a mirror code tax system by reason of this section, or
(B) who is eligible for a payment under a plan described in paragraph (2).
(4) Mirror code tax system
For purposes of this subsection, the term "mirror code tax system" means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.
(5) Treatment of payments
For purposes of
(Added
Editorial Notes
Prior Provisions
A prior section 21 was renumbered
Amendments
2021—Subsec. (g).
Subsec. (h).
2007—Subsec. (e)(5).
2005—Subsec. (b)(1)(B).
2004—Subsec. (a)(1).
Subsec. (b)(1).
"(A) a dependent of the taxpayer who is under the age of 13 and with respect to whom the taxpayer is entitled to a deduction under section 151(c),
"(B) a dependent of the taxpayer who is physically or mentally incapable of caring for himself, or
"(C) the spouse of the taxpayer, if he is physically or mentally incapable of caring for himself."
Subsec. (e)(1).
Subsec. (e)(5).
Subsec. (e)(6)(B).
2002—Subsec. (d)(2)(A).
Subsec. (d)(2)(B).
2001—Subsec. (a)(2).
Subsec. (c)(1).
Subsec. (c)(2).
1996—Subsec. (e)(10).
1988—Subsec. (b)(1)(A).
Subsec. (c).
Subsec. (e)(5)(B).
Subsec. (e)(9).
1987—Subsec. (b)(2)(A).
1986—Subsecs. (b)(1)(A), (e)(6)(A).
Subsec. (e)(6)(B).
1984—
Subsec. (a)(1).
Subsec. (b).
Subsec. (c).
Subsec. (d).
Subsec. (d)(2).
Subsec. (d)(2)(A).
Subsec. (d)(2)(B).
Subsec. (e).
Subsec. (e)(5).
"(A) paragraph (2) or (4) of section 152(e) applies to any child with respect to any calendar year, and
"(B) such child is under the age of 15 or is physically or mentally incapable of caring for himself,"
for former provisions:
"(A) a child (as defined in section 151(e)(3)) who is under the age of 15 or who is physically or mentally incapable of caring for himself receives over half of his support during the calendar year from his parents who are divorced or legally separated under a decree of divorce or separate maintenance or who are separated under a written separation agreement, and
"(B) such child is in the custody of one or both of his parents for more than one-half of the calendar year."
and substituted in concluding text "(whichever is appropriate) with respect to the custodial parent (within the meaning of section 152(e)(1)), and shall not be treated as a qualifying individual with respect to the noncustodial parent" for ", as the case may be, with respect to that parent who has custody for a longer period during such calendar year than the other parent, and shall not be treated as being a qualifying individual with respect to such other parent."
Subsecs. (f), (g).
1983—Subsec. (b)(2).
1981—Subsec. (a).
Subsec. (c)(2)(B).
Subsec. (c)(2)(C), (D).
Subsec. (d)(1).
Subsec. (d)(2).
Subsec. (e)(2)(A).
Subsec. (e)(2)(B).
1978—Subsec. (f)(6).
Statutory Notes and Related Subsidiaries
Effective Date of 2021 Amendment
Effective Date of 2005 Amendment
Effective Date of 2004 Amendment
Amendment by
Effective Date of 2002 Amendment
Effective Date of 2001 Amendment
Effective Date of 1996 Amendment
"(1)
"(2)
Effective Date of 1988 Amendment
Effective Date of 1987 Amendment
"(1)
"(2)
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by section 423(c)(4) of
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1981 Amendment
"(1) Except as provided in paragraph (2), the amendments made by this section [amending this section and enacting
"(2) The amendments made by subsection (e)(2) [amending
Effective Date of 1978 Amendment
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1975, see section 508 of
Program To Increase Public Awareness
§22. Credit for the elderly and the permanently and totally disabled
(a) General rule
In the case of a qualified individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 15 percent of such individual's section 22 amount for such taxable year.
(b) Qualified individual
For purposes of this section, the term "qualified individual" means any individual—
(1) who has attained age 65 before the close of the taxable year, or
(2) who retired on disability before the close of the taxable year and who, when he retired, was permanently and totally disabled.
(c) Section 22 amount
For purposes of subsection (a)—
(1) In general
An individual's section 22 amount for the taxable year shall be the applicable initial amount determined under paragraph (2), reduced as provided in paragraph (3) and in subsection (d).
(2) Initial amount
(A) In general
Except as provided in subparagraph (B), the initial amount shall be—
(i) $5,000 in the case of a single individual, or a joint return where only one spouse is a qualified individual,
(ii) $7,500 in the case of a joint return where both spouses are qualified individuals, or
(iii) $3,750 in the case of a married individual filing a separate return.
(B) Limitation in case of individuals who have not attained age 65
(i) In general
In the case of a qualified individual who has not attained age 65 before the close of the taxable year, except as provided in clause (ii), the initial amount shall not exceed the disability income for the taxable year.
(ii) Special rules in case of joint return
In the case of a joint return where both spouses are qualified individuals and at least one spouse has not attained age 65 before the close of the taxable year—
(I) if both spouses have not attained age 65 before the close of the taxable year, the initial amount shall not exceed the sum of such spouses' disability income, or
(II) if one spouse has attained age 65 before the close of the taxable year, the initial amount shall not exceed the sum of $5,000 plus the disability income for the taxable year of the spouse who has not attained age 65 before the close of the taxable year.
(iii) Disability income
For purposes of this subparagraph, the term "disability income" means the aggregate amount includable in the gross income of the individual for the taxable year under section 72 or 105(a) to the extent such amount constitutes wages (or payments in lieu of wages) for the period during which the individual is absent from work on account of permanent and total disability.
(3) Reduction
(A) In general
The reduction under this paragraph is an amount equal to the sum of the amounts received by the individual (or, in the case of a joint return, by either spouse) as a pension or annuity or as a disability benefit—
(i) which is excluded from gross income and payable under—
(I) title II of the Social Security Act,
(II) the Railroad Retirement Act of 1974, or
(III) a law administered by the Department of Veterans Affairs, or
(ii) which is excluded from gross income under any provision of law not contained in this title.
No reduction shall be made under clause (i)(III) for any amount described in section 104(a)(4).
(B) Treatment of certain workmen's compensation benefits
For purposes of subparagraph (A), any amount treated as a social security benefit under section 86(d)(3) shall be treated as a disability benefit received under title II of the Social Security Act.
(d) Adjusted gross income limitation
If the adjusted gross income of the taxpayer exceeds—
(1) $7,500 in the case of a single individual,
(2) $10,000 in the case of a joint return, or
(3) $5,000 in the case of a married individual filing a separate return,
the section 22 amount shall be reduced by one-half of the excess of the adjusted gross income over $7,500, $10,000, or $5,000, as the case may be.
(e) Definitions and special rules
For purposes of this section—
(1) Married couple must file joint return
Except in the case of a husband and wife who live apart at all times during the taxable year, if the taxpayer is married at the close of the taxable year, the credit provided by this section shall be allowed only if the taxpayer and his spouse file a joint return for the taxable year.
(2) Marital status
Marital status shall be determined under section 7703.
(3) Permanent and total disability defined
An individual is permanently and totally disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered to be permanently and totally disabled unless he furnishes proof of the existence thereof in such form and manner, and at such times, as the Secretary may require.
(f) Nonresident alien ineligible for credit
No credit shall be allowed under this section to any nonresident alien.
(Aug. 16, 1954, ch. 736,
Editorial Notes
References in Text
The Social Security Act, referred to in subsec. (c)(3)(A)(i)(I), (B), is act Aug. 14, 1935, ch. 531,
The Railroad Retirement Act of 1974, referred to in subsec. (c)(3)(A)(i)(II), is act Aug. 29, 1935, ch. 812, as amended generally by
Amendments
2018—Subsec. (c)(3)(A)(i)(III).
1986—Subsec. (e)(2).
1984—
Subsec. (a).
Subsec. (c).
Subsec. (c)(1).
Subsec. (d).
1983—
Subsec. (a).
Subsec. (b).
Subsec. (c).
Subsec. (d).
Subsec. (e).
Subsec. (f).
1981—Subsec. (e)(9)(B).
1978—Subsec. (e)(2).
Subsec. (e)(4)(B).
Subsec. (e)(5)(B).
Subsec. (e)(8), (9).
1976—
1974—Subsec. (c)(1)(E), (F).
1964—Subsec. (a).
Subsecs. (i), (j).
1962—Subsec. (c)(1).
Subsec. (d).
1956—Subsec. (d)(2). Act Jan. 28, 1956, reduced from 75 to 72 the age at which there will be no limitation on earned income and increased from $900 to $1,200 the amount that an individual over 65 can earn without reducing the $1,200 on which the retirement credit is computed.
1955—Subsec. (f). Act Aug. 9, 1955, extended the retirement income tax credit to members of the Armed Forces.
Statutory Notes and Related Subsidiaries
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by section 474(d) of
Effective Date of 1983 Amendment
"(1)
"(2)
Effective Date of 1981 Amendment
Amendment by
Effective Date of 1978 Amendment
"(A) The amendments made by paragraphs (1) and (2) [amending this section] shall apply to taxable years beginning after December 31, 1975.
"(B) The amendments made by paragraph (3) [amending this section] shall apply to taxable years beginning after December 31, 1977."
Effective Date of 1976 Amendment
Amendment by
Effective Date of 1974 Amendment
Amendment by
Effective Date of 1964 Amendment
Amendment by section 113(a) of
Effective Date of 1962 Amendment
Effective Date of 1956 Amendment
Act Jan. 28, 1956, ch. 18, §2,
Effective Date of 1955 Amendment
Act Aug. 9, 1955, ch. 659, §2,
Determination of Retirement Income Credit Under Provisions as They Existed Prior to Amendment by Pub. L. 94–455 Election
§23. Adoption expenses
(a) Allowance of credit
(1) In general
In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer.
(2) Year credit allowed
The credit under paragraph (1) with respect to any expense shall be allowed—
(A) in the case of any expense paid or incurred before the taxable year in which such adoption becomes final, for the taxable year following the taxable year during which such expense is paid or incurred, and
(B) in the case of an expense paid or incurred during or after the taxable year in which such adoption becomes final, for the taxable year in which such expense is paid or incurred.
(3) $10,000 credit for adoption of child with special needs regardless of expenses
In the case of an adoption of a child with special needs which becomes final during a taxable year, the taxpayer shall be treated as having paid during such year qualified adoption expenses with respect to such adoption in an amount equal to the excess (if any) of $10,000 over the aggregate qualified adoption expenses actually paid or incurred by the taxpayer with respect to such adoption during such taxable year and all prior taxable years.
(b) Limitations
(1) Dollar limitation
The aggregate amount of qualified adoption expenses which may be taken into account under subsection (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $10,000.
(2) Income limitation
(A) In general
The amount allowable as a credit under subsection (a) for any taxable year (determined without regard to subsection (c)) shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this paragraph but with regard to paragraph (1)) as—
(i) the amount (if any) by which the taxpayer's adjusted gross income exceeds $150,000, bears to
(ii) $40,000.
(B) Determination of adjusted gross income
For purposes of subparagraph (A), adjusted gross income shall be determined without regard to sections 911, 931, and 933.
(3) Denial of double benefit
(A) In general
No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter.
(B) Grants
No credit shall be allowed under subsection (a) for any expense to the extent that funds for such expense are received under any Federal, State, or local program.
(c) Carryforwards of unused credit
(1) In general
If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section and section 25D), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.
(2) Limitation
No credit may be carried forward under this subsection to any taxable year following the fifth taxable year after the taxable year in which the credit arose. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis.
(d) Definitions
For purposes of this section—
(1) Qualified adoption expenses
The term "qualified adoption expenses" means reasonable and necessary adoption fees, court costs, attorney fees, and other expenses—
(A) which are directly related to, and the principal purpose of which is for, the legal adoption of an eligible child by the taxpayer,
(B) which are not incurred in violation of State or Federal law or in carrying out any surrogate parenting arrangement,
(C) which are not expenses in connection with the adoption by an individual of a child who is the child of such individual's spouse, and
(D) which are not reimbursed under an employer program or otherwise.
(2) Eligible child
The term "eligible child" means any individual who—
(A) has not attained age 18, or
(B) is physically or mentally incapable of caring for himself.
(3) Child with special needs
The term "child with special needs" means any child if—
(A) a State has determined that the child cannot or should not be returned to the home of his parents,
(B) such State has determined that there exists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical conditions or physical, mental, or emotional handicaps) because of which it is reasonable to conclude that such child cannot be placed with adoptive parents without providing adoption assistance, and
(C) such child is a citizen or resident of the United States (as defined in section 217(h)(3)).
(e) Special rules for foreign adoptions
In the case of an adoption of a child who is not a citizen or resident of the United States (as defined in section 217(h)(3))—
(1) subsection (a) shall not apply to any qualified adoption expense with respect to such adoption unless such adoption becomes final, and
(2) any such expense which is paid or incurred before the taxable year in which such adoption becomes final shall be taken into account under this section as if such expense were paid or incurred during such year.
(f) Filing requirements
(1) Married couples must file joint returns
Rules similar to the rules of paragraphs (2), (3), and (4) of section 21(e) shall apply for purposes of this section.
(2) Taxpayer must include TIN
(A) In general
No credit shall be allowed under this section with respect to any eligible child unless the taxpayer includes (if known) the name, age, and TIN of such child on the return of tax for the taxable year.
(B) Other methods
The Secretary may, in lieu of the information referred to in subparagraph (A), require other information meeting the purposes of subparagraph (A), including identification of an agent assisting with the adoption.
(g) Basis adjustments
For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
(h) Adjustments for inflation
In the case of a taxable year beginning after December 31, 2002, each of the dollar amounts in subsection (a)(3) and paragraphs (1) and (2)(A)(i) of subsection (b) shall be increased by an amount equal to—
(1) such dollar amount, multiplied by
(2) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "calendar year 2001" for "calendar year 2016" in subparagraph (A)(ii) thereof.
If any amount as increased under the preceding sentence is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.
(i) Regulations
The Secretary shall prescribe such regulations as may be appropriate to carry out this section and section 137, including regulations which treat unmarried individuals who pay or incur qualified adoption expenses with respect to the same child as 1 taxpayer for purposes of applying the dollar amounts in subsections (a)(3) and (b)(1) of this section and in section 137(b)(1).
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Editorial Notes
Prior Provisions
A prior section 23, added
Amendments
2018—Subsec. (c)(1).
2017—Subsec. (h)(2).
2013—Subsec. (b)(4).
"(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
"(B) the sum of the credits allowable under this subpart (other than this section and section 25D) and section 27 for the taxable year."
Subsec. (c).
2010—Subsec. (a)(3).
Subsec. (b)(1).
Subsec. (b)(4).
"(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
"(B) the sum of the credits allowable under this subpart (other than this section and section 25D) and section 27 for the taxable year."
See Effective and Termination Dates of 2010 Amendment note below.
Subsec. (c).
Subsec. (h).
2008—Subsec. (b)(4)(B).
2005—Subsec. (b)(4).
Subsec. (c).
2002—Subsec. (a)(1).
"(A) in the case of an adoption of a child other than a child with special needs, the amount of the qualified adoption expenses paid or incurred by the taxpayer, and
"(B) in the case of an adoption of a child with special needs, $10,000."
Subsec. (a)(2).
Subsec. (a)(3).
Subsec. (b)(1).
Subsec. (h).
Subsec. (i).
2001—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (b)(1).
Subsec. (b)(2)(A)(i).
Subsec. (b)(4).
Subsec. (c).
Subsec. (d)(2).
"(A) who—
"(i) has not attained age 18, or
"(ii) is physically or mentally incapable of caring for himself, and
"(B) in the case of qualified adoption expenses paid or incurred after December 31, 2001, who is a child with special needs."
Subsecs. (h), (i).
1998—Subsec. (b)(2)(A).
Subsec. (c).
1997—Subsec. (a)(2).
"(A) for the taxable year following the taxable year during which such expense is paid or incurred, or
"(B) in the case of an expense which is paid or incurred during the taxable year in which the adoption becomes final, for such taxable year."
Subsec. (b)(2)(B).
"(i) without regard to sections 911, 931, and 933, and
"(ii) after the application of sections 86, 135, 137, 219, and 469."
Statutory Notes and Related Subsidiaries
Effective Date of 2017 Amendment
Amendment by
Effective Date of 2013 Amendment
Effective and Termination Dates of 2010 Amendment
Amendment by
Amendment by
Effective and Termination Dates of 2008 Amendment
"(1)
"(2)
"(3)
Effective and Termination Dates of 2005 Amendment
"(1)
"(2)
"(3)
Effective Date of 2002 Amendment
Amendment by section 418(a)(1) of
Effective Date of 2001 Amendment
Amendment by section 201(b)(2)(E) of
"(1)
"(2)
Effective Date of 1998 Amendment
Amendment by section 6008(d)(6) of
Effective Date of 1997 Amendment
"(1)
"(2)
Effective Date
Savings Provision
Amendment by
"(1) any provision amended or repealed by the amendments made by subsection (b) or (d) [see Tables for classification] applied to—
"(A) any transaction occurring before the date of the enactment of this Act [Mar. 23, 2018],
"(B) any property acquired before such date of enactment, or
"(C) any item of income, loss, deduction, or credit taken into account before such date of enactment, and
"(2) the treatment of such transaction, property, or item under such provision would (without regard to the amendments or repeals made by such subsection) affect the liability for tax for periods ending after such date of enactment,
nothing in the amendments or repeals made by this section [see Tables for classification] shall be construed to affect the treatment of such transaction, property, or item for purposes of determining liability for tax for periods ending after such date of enactment."
Expenses Paid or Incurred Before 2002
Tax Credit and Gross Income Exclusion Study and Report
§24. Child tax credit
(a) Allowance of credit
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each qualifying child of the taxpayer for which the taxpayer is allowed a deduction under section 151 an amount equal to $1,000.
(b) Limitations
(1) Limitation based on adjusted gross income
The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income exceeds the threshold amount. For purposes of the preceding sentence, the term "modified adjusted gross income" means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.
(2) Threshold amount
For purposes of paragraph (1), the term "threshold amount" means—
(A) $110,000 in the case of a joint return,
(B) $75,000 in the case of an individual who is not married, and
(C) $55,000 in the case of a married individual filing a separate return.
For purposes of this paragraph, marital status shall be determined under section 7703.
(c) Qualifying child
For purposes of this section—
(1) In general
The term "qualifying child" means a qualifying child of the taxpayer (as defined in section 152(c)) who has not attained age 17.
(2) Exception for certain noncitizens
The term "qualifying child" shall not include any individual who would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows "resident of the United States".
(d) Portion of credit refundable
(1) In general
The aggregate credits allowed to a taxpayer under subpart C shall be increased by the lesser of—
(A) the credit which would be allowed under this section without regard to this subsection and the limitation under section 26(a) or
(B) the amount by which the aggregate amount of credits allowed by this subpart (determined without regard to this subsection) would increase if the limitation imposed by section 26(a) were increased by the greater of—
(i) 15 percent of so much of the taxpayer's earned income (within the meaning of section 32) which is taken into account in computing taxable income for the taxable year as exceeds $3,000, or
(ii) in the case of a taxpayer with 3 or more qualifying children, the excess (if any) of—
(I) the taxpayer's social security taxes for the taxable year, over
(II) the credit allowed under section 32 for the taxable year.
The amount of the credit allowed under this subsection shall not be treated as a credit allowed under this subpart and shall reduce the amount of credit otherwise allowable under subsection (a) without regard to section 26(a). For purposes of subparagraph (B), any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year.
(2) Social security taxes
For purposes of paragraph (1)—
(A) In general
The term "social security taxes" means, with respect to any taxpayer for any taxable year—
(i) the amount of the taxes imposed by sections 3101 and 3201(a) on amounts received by the taxpayer during the calendar year in which the taxable year begins,
(ii) 50 percent of the taxes imposed by section 1401 on the self-employment income of the taxpayer for the taxable year, and
(iii) 50 percent of the taxes imposed by section 3211(a) on amounts received by the taxpayer during the calendar year in which the taxable year begins.
(B) Coordination with special refund of social security taxes
The term "social security taxes" shall not include any taxes to the extent the taxpayer is entitled to a special refund of such taxes under section 6413(c).
(C) Special rule
Any amounts paid pursuant to an agreement under section 3121(l) (relating to agreements entered into by American employers with respect to foreign affiliates) which are equivalent to the taxes referred to in subparagraph (A)(i) shall be treated as taxes referred to in such subparagraph.
(3) Exception for taxpayers excluding foreign earned income
Paragraph (1) shall not apply to any taxpayer for any taxable year if such taxpayer elects to exclude any amount from gross income under section 911 for such taxable year.
(e) Identification requirements
(1) Qualifying child identification requirement
No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the name and taxpayer identification number of such qualifying child on the return of tax for the taxable year and such taxpayer identification number was issued on or before the due date for filing such return.
(2) Taxpayer identification requirement
No credit shall be allowed under this section if the taxpayer identification number of the taxpayer was issued after the due date for filing the return for the taxable year.
(f) Taxable year must be full taxable year
Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.
(g) Restrictions on taxpayers who improperly claimed credit in prior year
(1) Taxpayers making prior fraudulent or reckless claims
(A) In general
No credit shall be allowed under this section for any taxable year in the disallowance period.
(B) Disallowance period
For purposes of subparagraph (A), the disallowance period is—
(i) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of credit under this section was due to fraud, and
(ii) the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud).
(2) Taxpayers making improper prior claims
In the case of a taxpayer who is denied credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of
(h) Special rules for taxable years 2018 through 2025
(1) In general
In the case of a taxable year beginning after December 31, 2017, and before January 1, 2026, this section shall be applied as provided in paragraphs (2) through (7).
(2) Credit amount
Subsection (a) shall be applied by substituting "$2,000" for "$1,000".
(3) Limitation
In lieu of the amount determined under subsection (b)(2), the threshold amount shall be $400,000 in the case of a joint return ($200,000 in any other case).
(4) Partial credit allowed for certain other dependents
(A) In general
The credit determined under subsection (a) (after the application of paragraph (2)) shall be increased by $500 for each dependent of the taxpayer (as defined in section 152) other than a qualifying child described in subsection (c).
(B) Exception for certain noncitizens
Subparagraph (A) shall not apply with respect to any individual who would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows "resident of the United States".
(C) Certain qualifying children
In the case of any qualifying child with respect to whom a credit is not allowed under this section by reason of paragraph (7), such child shall be treated as a dependent to whom subparagraph (A) applies.
(5) Maximum amount of refundable credit
(A) In general
The amount determined under subsection (d)(1)(A) with respect to any qualifying child shall not exceed $1,400, and such subsection shall be applied without regard to paragraph (4) of this subsection.
(B) Adjustment for inflation
In the case of a taxable year beginning after 2018, the $1,400 amount in subparagraph (A) shall be increased by an amount equal to—
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "2017" for "2016" in subparagraph (A)(ii) thereof.
If any increase under this clause is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.
(6) Earned income threshold for refundable credit
Subsection (d)(1)(B)(i) shall be applied by substituting "$2,500" for "$3,000".
(7) Social security number required
No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the social security number of such child on the return of tax for the taxable year. For purposes of the preceding sentence, the term "social security number" means a social security number issued to an individual by the Social Security Administration, but only if the social security number is issued—
(A) to a citizen of the United States or pursuant to subclause (I) (or that portion of subclause (III) that relates to subclause (I)) of section 205(c)(2)(B)(i) of the Social Security Act, and
(B) before the due date for such return.
(i) Special rules for 2021
In the case of any taxable year beginning after December 31, 2020, and before January 1, 2022—
(1) Refundable credit
If the taxpayer (in the case of a joint return, either spouse) has a principal place of abode in the United States (determined as provided in section 32) for more than one-half of the taxable year or is a bona fide resident of Puerto Rico (within the meaning of section 937(a)) for such taxable year—
(A) subsection (d) shall not apply, and
(B) so much of the credit determined under subsection (a) (after application of subparagraph (A)) as does not exceed the amount of such credit which would be so determined without regard to subsection (h)(4) shall be allowed under subpart C (and not allowed under this subpart).
(2) 17-year-olds eligible for treatment as qualifying children
This section shall be applied—
(A) by substituting "age 18" for "age 17" in subsection (c)(1), and
(B) by substituting "described in subsection (c) (determined after the application of subsection (i)(2)(A))" for "described in subsection (c)" in subsection (h)(4)(A).
(3) Credit amount
Subsection (h)(2) shall not apply and subsection (a) shall be applied by substituting "$3,000 ($3,600 in the case of a qualifying child who has not attained age 6 as of the close of the calendar year in which the taxable year of the taxpayer begins)" for "$1,000".
(4) Reduction of increased credit amount based on modified adjusted gross income
(A) In general
The amount of the credit allowable under subsection (a) (determined without regard to subsection (b)) shall be reduced by $50 for each $1,000 (or fraction thereof) by which the taxpayer's modified adjusted gross income (as defined in subsection (b)) exceeds the applicable threshold amount.
(B) Applicable threshold amount
For purposes of this paragraph, the term "applicable threshold amount" means—
(i) $150,000, in the case of a joint return or surviving spouse (as defined in section 2(a)) ,1
(ii) $112,500, in the case of a head of household (as defined in section 2(b)), and
(iii) $75,000, in any other case.
(C) Limitation on reduction
(i) In general
The amount of the reduction under subparagraph (A) shall not exceed the lesser of—
(I) the applicable credit increase amount, or
(II) 5 percent of the applicable phaseout threshold range.
(ii) Applicable credit increase amount
For purposes of this subparagraph, the term "applicable credit increase amount" means the excess (if any) of—
(I) the amount of the credit allowable under this section for the taxable year determined without regard to this paragraph and subsection (b), over
(II) the amount of such credit as so determined and without regard to paragraph (3).
(iii) Applicable phaseout threshold range
For purposes of this subparagraph, the term "applicable phaseout threshold range" means the excess of—
(I) the threshold amount applicable to the taxpayer under subsection (b) (determined after the application of subsection (h)(3)), over
(II) the applicable threshold amount applicable to the taxpayer under this paragraph.
(D) Coordination with limitation on overall credit
Subsection (b) shall be applied by substituting "the credit allowable under subsection (a) (determined after the application of subsection (i)(4)(A)" for "the credit allowable under subsection (a)".
(j) Reconciliation of credit and advance credit
(1) In general
The amount of the credit allowed under this section to any taxpayer for any taxable year shall be reduced (but not below zero) by the aggregate amount of payments made under section 7527A to such taxpayer during such taxable year. Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).
(2) Excess advance payments
(A) In general
If the aggregate amount of payments under section 7527A to the taxpayer during the taxable year exceeds the amount of the credit allowed under this section to such taxpayer for such taxable year (determined without regard to paragraph (1)), the tax imposed by this chapter for such taxable year shall be increased by the amount of such excess. Any failure to so increase the tax shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).
(B) Safe harbor based on modified adjusted gross income
(i) In general
In the case of a taxpayer whose modified adjusted gross income (as defined in subsection (b)) for the taxable year does not exceed 200 percent of the applicable income threshold, the amount of the increase determined under subparagraph (A) with respect to such taxpayer for such taxable year shall be reduced (but not below zero) by the safe harbor amount.
(ii) Phase out of safe harbor amount
In the case of a taxpayer whose modified adjusted gross income (as defined in subsection (b)) for the taxable year exceeds the applicable income threshold, the safe harbor amount otherwise in effect under clause (i) shall be reduced by the amount which bears the same ratio to such amount as such excess bears to the applicable income threshold.
(iii) Applicable income threshold
For purposes of this subparagraph, the term "applicable income threshold" means—
(I) $60,000 in the case of a joint return or surviving spouse (as defined in section 2(a)),
(II) $50,000 in the case of a head of household, and
(III) $40,000 in any other case.
(iv) Safe harbor amount
For purposes of this subparagraph, the term "safe harbor amount" means, with respect to any taxable year, the product of—
(I) $2,000, multiplied by
(II) the excess (if any) of the number of qualified children taken into account in determining the annual advance amount with respect to the taxpayer under section 7527A with respect to months beginning in such taxable year, over the number of qualified children taken into account in determining the credit allowed under this section for such taxable year.
(k) Application of credit in possessions
(1) Mirror code possessions
(A) In general
The Secretary shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of this section (determined without regard to this subsection) with respect to taxable years beginning after 2020. Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.
(B) Coordination with credit allowed against United States income taxes
No credit shall be allowed under this section for any taxable year to any individual to whom a credit is allowable against taxes imposed by a possession of the United States with a mirror code tax system by reason of the application of this section in such possession for such taxable year.
(C) Mirror code tax system
For purposes of this paragraph, the term "mirror code tax system" means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.
(2) Puerto Rico
(A) Application to taxable years in 2021
(i) For application of refundable credit to residents of Puerto Rico, see subsection (i)(1).
(ii) For nonapplication of advance payment to residents of Puerto Rico, see section 7527A(e)(4)(A).
(B) Application to taxable years after 2021
In the case of any bona fide resident of Puerto Rico (within the meaning of section 937(a)) for any taxable year beginning after December 31, 2021—
(i) the credit determined under this section shall be allowable to such resident, and
(ii) subsection (d)(1)(B)(ii) shall be applied without regard to the phrase "in the case of a taxpayer with 3 or more qualifying children".
(3) American Samoa
(A) In general
The Secretary shall pay to American Samoa amounts estimated by the Secretary as being equal to the aggregate benefits that would have been provided to residents of American Samoa by reason of the application of this section for taxable years beginning after 2020 if the provisions of this section had been in effect in American Samoa (applied as if American Samoa were the United States and without regard to the application of this section to bona fide residents of Puerto Rico under subsection (i)(1)).
(B) Distribution requirement
Subparagraph (A) shall not apply unless American Samoa has a plan, which has been approved by the Secretary, under which American Samoa will promptly distribute such payments to its residents.
(C) Coordination with credit allowed against United States income taxes
(i) In general
In the case of a taxable year with respect to which a plan is approved under subparagraph (B), this section (other than this subsection) shall not apply to any individual eligible for a distribution under such plan.
(ii) Application of section in event of absence of approved plan
In the case of a taxable year with respect to which a plan is not approved under subparagraph (B)—
(I) if such taxable year begins in 2021, subsection (i)(1) shall be applied by substituting "bona fide resident of Puerto Rico or American Samoa" for "bona fide resident of Puerto Rico", and
(II) if such taxable year begins after December 31, 2021, rules similar to the rules of paragraph (2)(B) shall apply with respect to bona fide residents of American Samoa (within the meaning of section 937(a)).
(4) Treatment of payments
For purposes of
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Editorial Notes
References in Text
Section 205(c)(2)(B)(i) of the Social Security Act, referred to in subsec. (h)(7)(A), is classified to
Prior Provisions
A prior section 24, added
Amendments
2021—Subsec. (i).
Subsec. (j).
Subsec. (k).
2018—Subsec. (d)(3), (5).
Subsec. (e)(2).
2017—Subsec. (h).
2015—Subsec. (d)(1)(B)(i).
Subsec. (d)(3), (4).
Subsec. (d)(5).
Subsec. (e).
Subsec. (g).
2014—Subsec. (d)(4).
2013—Subsec. (b)(3).
"(A) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
"(B) the sum of the credits allowable under this subpart (other than this section and sections 23, 25A(i), 25B, 25D, 30, 30B, and 30D) and section 27 for the taxable year."
Subsec. (d)(1).
Subsec. (d)(1)(A), (B).
Subsec. (d)(4).
2010—Subsec. (b)(3)(B).
Subsec. (d)(4).
2009—Subsec. (b)(3)(B).
Subsec. (d)(4).
2008—Subsec. (a).
Subsec. (b)(3)(B).
Subsec. (d)(4).
2007—Subsec. (d)(1)(B).
Subsec. (d)(1)(B)(ii)(II).
2005—Subsec. (b)(3).
Subsec. (d)(1).
"(A) the credit which would be allowed under this section without regard to this subsection and the limitation under subsection (b)(3), or
"(B) the amount by which the amount of credit allowed by this section (determined without regard to this subsection) would increase if the limitation imposed by subsection (b)(3) were increased by the greater of—
"(i) 15 percent of so much of the taxpayer's earned income (within the meaning of section 32) which is taken into account in computing taxable income for the taxable year as exceeds $10,000, or
"(ii) in the case of a taxpayer with 3 or more qualifying children, the excess (if any) of—
"(I) the taxpayer's social security taxes for the taxable year, over
"(II) the credit allowed under section 32 for the taxable year.
The amount of the credit allowed under this subsection shall not be treated as a credit allowed under this subpart and shall reduce the amount of credit otherwise allowable under subsection (a) without regard to subsection (b)(3). For purposes of subparagraph (B), any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year."
2004—Subsec. (a).
Subsec. (c)(1).
"(A) the taxpayer is allowed a deduction under section 151 with respect to such individual for the taxable year,
"(B) such individual has not attained the age of 17 as of the close of the calendar year in which the taxable year of the taxpayer begins, and
"(C) such individual bears a relationship to the taxpayer described in section 32(c)(3)(B)."
Subsec. (c)(2).
Subsec. (d)(1).
Subsec. (d)(1)(B)(i).
Subsec. (d)(2)(A)(iii).
2003—Subsec. (a)(2).
2002—Subsec. (b)(3)(B).
Subsec. (d)(1)(B).
2001—Subsec. (a).
Subsec. (b).
Subsec. (b)(1).
Subsec. (b)(3).
Subsec. (b)(3)(B).
Subsec. (d).
"(A) the credit which would be allowed under this section without regard to this subsection and the limitation under section 26(a); or
"(B) the amount by which the aggregate amount of credits allowed by this subpart (without regard to this subsection) would increase if the limitation imposed by section 26(a) were increased by the excess (if any) of—
"(i) the taxpayer's Social Security taxes for the taxable year, over
"(ii) the credit allowed under section 32 (determined without regard to subsection (n)) for the taxable year.
The amount of the credit allowed under this subsection shall not be treated as a credit allowed under this subpart and shall reduce the amount of credit otherwise allowable under subsection (a) without regard to section 26(a)."
Subsec. (d)(1).
Subsec. (d)(1)(B).
Subsec. (d)(2).
"(A) the amount of tax imposed by section 55 (relating to alternative minimum tax) with respect to such taxpayer for such taxable year, over
"(B) the amount of the reduction under section 32(h) with respect to such taxpayer for such taxable year."
Subsec. (d)(2)(A)(iii).
Subsec. (d)(3).
Subsec. (d)(4).
1999—Subsec. (d)(2).
1998—Subsec. (d)(1).
"(A) the amount of the credit allowed under this section (without regard to this subsection and after application of the limitation under section 26), or
"(B) the alternative credit amount determined under paragraph (2)."
Subsec. (d)(2).
Subsec. (d)(3).
"(A) increased by the taxpayer's social security taxes for such taxable year, and
"(B) reduced by the sum of—
"(i) the credits allowed under this part other than under subpart C or this section, and
"(ii) the credit allowed under section 32 without regard to subsection (m) thereof."
Subsec. (d)(4).
Subsec. (d)(5).
Statutory Notes and Related Subsidiaries
Effective Date of 2021 Amendment
Effective Date of 2018 Amendment
Effective Date of 2017 Amendment
Effective Date of 2015 Amendment
Effective Date of 2014 Amendment
Effective Date of 2013 Amendment
"(1)
"(2)
Amendment by section 104(c)(2)(B) of
Effective and Termination Dates of 2010 Amendment
Amendment by
Amendment by
Effective and Termination Dates of 2009 Amendment
Effective and Termination Dates of 2008 Amendment
Amendment by section 106(e)(2)(B) of title I of div. B of
"(e)
"(f)
Effective Date of 2007 Amendment
Effective and Termination Dates of 2005 Amendment
Amendment by
Amendment by
Effective and Termination Dates of 2004 Amendment
Amendment by section 101(a) of
Amendment by title I of
Amendment by section 204 of
Effective and Termination Dates of 2003 Amendment
"(1)
"(2)
Amendments by title I of
Effective Date of 2002 Amendment
Amendment by section 411(b) of
Effective Date of 2001 Amendment
Amendment by sections 201(b), 202(f), and 618(b) of
Amendment by sections 201(b), 202(f), and 618(b) of
"(1)
"(2)
Amendment by section 202(f)(2)(B) of
Effective Date of 1999 Amendment
Effective Date of 1998 Amendment
Amendment by
Effective Date
Refunds Disregarded in Administration of Federal and Federally Assisted Programs
§25. Interest on certain home mortgages
(a) Allowance of credit
(1) In general
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the product of—
(A) the certificate credit rate, and
(B) the interest paid or accrued by the taxpayer during the taxable year on the remaining principal of the certified indebtedness amount.
(2) Limitation where credit rate exceeds 20 percent
(A) In general
If the certificate credit rate exceeds 20 percent, the amount of the credit allowed to the taxpayer under paragraph (1) for any taxable year shall not exceed $2,000.
(B) Special rule where 2 or more persons hold interests in residence
If 2 or more persons hold interests in any residence, the limitation of subparagraph (A) shall be allocated among such persons in proportion to their respective interests in the residence.
(b) Certificate credit rate; certified indebtedness amount
For purposes of this section—
(1) Certificate credit rate
The term "certificate credit rate" means the rate of the credit allowable by this section which is specified in the mortgage credit certificate.
(2) Certified indebtedness amount
The term "certified indebtedness amount" means the amount of indebtedness which is—
(A) incurred by the taxpayer—
(i) to acquire the principal residence of the taxpayer,
(ii) as a qualified home improvement loan (as defined in section 143(k)(4)) with respect to such residence, or
(iii) as a qualified rehabilitation loan (as defined in section 143(k)(5)) with respect to such residence, and
(B) specified in the mortgage credit certificate.
(c) Mortgage credit certificate; qualified mortgage credit certificate program
For purposes of this section—
(1) Mortgage credit certificate
The term "mortgage credit certificate" means any certificate which—
(A) is issued under a qualified mortgage credit certificate program by the State or political subdivision having the authority to issue a qualified mortgage bond to provide financing on the principal residence of the taxpayer,
(B) is issued to the taxpayer in connection with the acquisition, qualified rehabilitation, or qualified home improvement of the taxpayer's principal residence,
(C) specifies—
(i) the certificate credit rate, and
(ii) the certified indebtedness amount, and
(D) is in such form as the Secretary may prescribe.
(2) Qualified mortgage credit certificate program
(A) In general
The term "qualified mortgage credit certificate program" means any program—
(i) which is established by a State or political subdivision thereof for any calendar year for which it is authorized to issue qualified mortgage bonds,
(ii) under which the issuing authority elects (in such manner and form as the Secretary may prescribe) not to issue an amount of private activity bonds which it may otherwise issue during such calendar year under section 146,
(iii) under which the indebtedness certified by mortgage credit certificates meets the requirements of the following subsections of section 143 (as modified by subparagraph (B) of this paragraph):
(I) subsection (c) (relating to residence requirements),
(II) subsection (d) (relating to 3-year requirement),
(III) subsection (e) (relating to purchase price requirement),
(IV) subsection (f) (relating to income requirements),
(V) subsection (h) (relating to portion of loans required to be placed in targeted areas), and
(VI) paragraph (1) of subsection (i) (relating to other requirements),
(iv) under which no mortgage credit certificate may be issued with respect to any residence any of the financing of which is provided from the proceeds of a qualified mortgage bond or a qualified veterans' mortgage bond,
(v) except to the extent provided in regulations, which is not limited to indebtedness incurred from particular lenders,
(vi) except to the extent provided in regulations, which provides that a mortgage credit certificate is not transferrable, and
(vii) if the issuing authority allocates a block of mortgage credit certificates for use in connection with a particular development, which requires the developer to furnish to the issuing authority and the homebuyer a certificate that the price for the residence is no higher than it would be without the use of a mortgage credit certificate.
Under regulations, rules similar to the rules of subparagraphs (B) and (C) of section 143(a)(2) shall apply to the requirements of this subparagraph.
(B) Modifications of section 143
Under regulations prescribed by the Secretary, in applying section 143 for purposes of subclauses (II), (IV), and (V) of subparagraph (A)(iii)—
(i) each qualified mortgage certificate credit program shall be treated as a separate issue,
(ii) the product determined by multiplying—
(I) the certified indebtedness amount of each mortgage credit certificate issued under such program, by
(II) the certificate credit rate specified in such certificate,
shall be treated as proceeds of such issue and the sum of such products shall be treated as the total proceeds of such issue, and
(iii) paragraph (1) of section 143(d) shall be applied by substituting "100 percent" for "95 percent or more".
Clause (iii) shall not apply if the issuing authority submits a plan to the Secretary for administering the 95-percent requirement of section 143(d)(1) and the Secretary is satisfied that such requirement will be met under such plan.
(d) Determination of certificate credit rate
For purposes of this section—
(1) In general
The certificate credit rate specified in any mortgage credit certificate shall not be less than 10 percent or more than 50 percent.
(2) Aggregate limit on certificate credit rates
(A) In general
In the case of each qualified mortgage credit certificate program, the sum of the products determined by multiplying—
(i) the certified indebtedness amount of each mortgage credit certificate issued under such program, by
(ii) the certificate credit rate with respect to such certificate,
shall not exceed 25 percent of the nonissued bond amount.
(B) Nonissued bond amount
For purposes of subparagraph (A), the term "nonissued bond amount" means, with respect to any qualified mortgage credit certificate program, the amount of qualified mortgage bonds which the issuing authority is otherwise authorized to issue and elects not to issue under subsection (c)(2)(A)(ii).
(e) Special rules and definitions
For purposes of this section—
(1) Carryforward of unused credit
(A) In general
If the credit allowable under subsection (a) for any taxable year exceeds the applicable tax limit for such taxable year, such excess shall be a carryover to each of the 3 succeeding taxable years and, subject to the limitations of subparagraph (B), shall be added to the credit allowable by subsection (a) for such succeeding taxable year.
(B) Limitation
The amount of the unused credit which may be taken into account under subparagraph (A) for any taxable year shall not exceed the amount (if any) by which the applicable tax limit for such taxable year exceeds the sum of—
(i) the credit allowable under subsection (a) for such taxable year determined without regard to this paragraph, and
(ii) the amounts which, by reason of this paragraph, are carried to such taxable year and are attributable to taxable years before the unused credit year.
(C) Applicable tax limit
For purposes of this paragraph, the term "applicable tax limit" means the limitation imposed by section 26(a) for the taxable year reduced by the sum of the credits allowable under this subpart (other than this section and sections 23 and 25D).
(2) Indebtedness not treated as certified where certain requirements not in fact met
Subsection (a) shall not apply to any indebtedness if all the requirements of subsection (c)(1), (d), (e), (f), and (i) of section 143 and clauses (iv), (v), and (vii) of subsection (c)(2)(A), were not in fact met with respect to such indebtedness. Except to the extent provided in regulations, the requirements described in the preceding sentence shall be treated as met if there is a certification, under penalty of perjury, that such requirements are met.
(3) Period for which certificate in effect
(A) In general
Except as provided in subparagraph (B), a mortgage credit certificate shall be treated as in effect with respect to interest attributable to the period—
(i) beginning on the date such certificate is issued, and
(ii) ending on the earlier of the date on which—
(I) the certificate is revoked by the issuing authority, or
(II) the residence to which such certificate relates ceases to be the principal residence of the individual to whom the certificate relates.
(B) Certificate invalid unless indebtedness incurred within certain period
A certificate shall not apply to any indebtedness which is incurred after the close of the second calendar year following the calendar year for which the issuing authority made the applicable election under subsection (c)(2)(A)(ii).
(C) Notice to Secretary when certificate revoked
Any issuing authority which revokes any mortgage credit certificate shall notify the Secretary of such revocation at such time and in such manner as the Secretary shall prescribe by regulations.
(4) Reissuance of mortgage credit certificates
The Secretary may prescribe regulations which allow the administrator of a mortgage credit certificate program to reissue a mortgage credit certificate specifying a certified mortgage indebtedness that replaces the outstanding balance of the certified mortgage indebtedness specified on the original certificate to any taxpayer to whom the original certificate was issued, under such terms and conditions as the Secretary determines are necessary to ensure that the amount of the credit allowable under subsection (a) with respect to such reissued certificate is equal to or less than the amount of credit which would be allowable under subsection (a) with respect to the original certificate for any taxable year ending after such reissuance.
(5) Public notice that certificates will be issued
At least 90 days before any mortgage credit certificate is to be issued after a qualified mortgage credit certificate program, the issuing authority shall provide reasonable public notice of—
(A) the eligibility requirements for such certificate,
(B) the methods by which such certificates are to be issued, and
(C) such other information as the Secretary may require.
(6) Interest paid or accrued to related persons
No credit shall be allowed under subsection (a) for any interest paid or accrued to a person who is a related person to the taxpayer (within the meaning of section 144(a)(3)(A)).
(7) Principal residence
The term "principal residence" has the same meaning as when used in section 121.
(8) Qualified rehabilitation and home improvement
(A) Qualified rehabilitation
The term "qualified rehabilitation" has the meaning given such term by section 143(k)(5)(B).
(B) Qualified home improvement
The term "qualified home improvement" means an alteration, repair, or improvement described in section 143(k)(4).
(9) Qualified mortgage bond
The term "qualified mortgage bond" has the meaning given such term by section 143(a)(1).
(10) Manufactured housing
For purposes of this section, the term "single family residence" includes any manufactured home which has a minimum of 400 square feet of living space and a minimum width in excess of 102 inches and which is of a kind customarily used at a fixed location. Nothing in the preceding sentence shall be construed as providing that such a home will be taken into account in making determinations under section 143.
(f) Reduction in aggregate amount of qualified mortgage bonds which may be issued where certain requirements not met
(1) In general
If for any calendar year any mortgage credit certificate program which satisfies procedural requirements with respect to volume limitations prescribed by the Secretary fails to meet the requirements of paragraph (2) of subsection (d), such requirements shall be treated as satisfied with respect to any certified indebtedness of such program, but the applicable State ceiling under subsection (d) of section 146 for the State in which such program operates shall be reduced by 1.25 times the correction amount with respect to such failure. Such reduction shall be applied to such State ceiling for the calendar year following the calendar year in which the Secretary determines the correction amount with respect to such failure.
(2) Correction amount
(A) In general
For purposes of paragraph (1), the term "correction amount" means an amount equal to the excess credit amount divided by 0.25.
(B) Excess credit amount
(i) In general
For purposes of subparagraph (A)(ii), the term "excess credit amount" means the excess of—
(I) the credit amount for any mortgage credit certificate program, over
(II) the amount which would have been the credit amount for such program had such program met the requirements of paragraph (2) of subsection (d).
(ii) Credit amount
For purposes of clause (i), the term "credit amount" means the sum of the products determined under clauses (i) and (ii) of subsection (d)(2)(A).
(3) Special rule for States having constitutional home rule cities
In the case of a State having one or more constitutional home rule cities (within the meaning of section 146(d)(3)(C)), the reduction in the State ceiling by reason of paragraph (1) shall be allocated to the constitutional home rule city, or to the portion of the State not within such city, whichever caused the reduction.
(4) Exception where certification program
The provisions of this subsection shall not apply in any case in which there is a certification program which is designed to ensure that the requirements of this section are met and which meets such requirements as the Secretary may by regulations prescribe.
(5) Waiver
The Secretary may waive the application of paragraph (1) in any case in which he determines that the failure is due to reasonable cause.
(g) Reporting requirements
Each person who makes a loan which is a certified indebtedness amount under any mortgage credit certificate shall file a report with the Secretary containing—
(1) the name, address, and social security account number of the individual to which the certificate was issued,
(2) the certificate's issuer, date of issue, certified indebtedness amount, and certificate credit rate, and
(3) such other information as the Secretary may require by regulations.
Each person who issues a mortgage credit certificate shall file a report showing such information as the Secretary shall by regulations prescribe. Any such report shall be filed at such time and in such manner as the Secretary may require by regulations.
(h) Regulations; contracts
(1) Regulations
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including regulations which may require recipients of mortgage credit certificates to pay a reasonable processing fee to defray the expenses incurred in administering the program.
(2) Contracts
The Secretary is authorized to enter into contracts with any person to provide services in connection with the administration of this section.
(i) Recapture of portion of Federal subsidy from use of mortgage credit certificates
For provisions increasing the tax imposed by this chapter to recapture a portion of the Federal subsidy from the use of mortgage credit certificates, see section 143(m).
(Added
Editorial Notes
Prior Provisions
A prior section 25 was renumbered
Amendments
2018—Subsec. (e)(1)(C).
2013—Subsec. (e)(1)(C).
"(i) in the case of a taxable year to which section 26(a)(2) applies, the limitation imposed by section 26(a)(2) for the taxable year reduced by the sum of the credits allowable under this subpart (other than this section and sections 23, 25D, and 1400C), and
"(ii) in the case of a taxable year to which section 26(a)(2) does not apply, the limitation imposed by section 26(a)(1) for the taxable year reduced by the sum of the credits allowable under this subpart (other than this section and sections 23, 24, 25A(i), 25B, 25D, 30, 30B, 30D, and 1400C)."
2010—Subsec. (e)(1)(C).
2009—Subsec. (e)(1)(C)(ii).
2008—Subsec. (e)(1)(C)(ii).
2005—Subsec. (e)(1)(C).
2001—Subsec. (e)(1)(C).
1998—Subsec. (e)(1)(C).
1997—Subsec. (e)(7).
1996—Subsec. (e)(1)(C).
1993—Subsecs. (h) to (j).
1991—Subsec. (h).
1990—Subsec. (h).
1989—Subsec. (h).
1988—Subsec. (c)(2)(A)(ii).
Subsec. (h).
Subsec. (j).
1986—Subsec. (a)(1)(B).
Subsec. (b)(2)(A)(ii).
Subsec. (b)(2)(A)(iii).
Subsec. (c)(2)(A).
Subsec. (c)(2)(A)(ii).
Subsec. (c)(2)(A)(iii).
"(I) subsection (d) (relating to residence requirements),
"(II) subsection (e) (relating to 3-year requirement),
"(III) subsection (f) (relating to purchase price requirement),
"(IV) subsection (h) (relating to portion of loans required to be placed in targeted areas), and
"(V) subsection (j), other than paragraph (2) thereof (relating to other requirements),".
Subsec. (c)(2)(A)(iii)(V).
Subsec. (c)(2)(B).
"(iii) paragraph (1) of section 103A(e) shall be applied by substituting '100 percent' for '90 percent or more'.
Clause (iii) shall not apply if the issuing authority submits a plan to the Secretary for administering the 90-percent requirement of section 103A(e)(1) and the Secretary is satisfied that such requirement will be met under such plan."
Subsec. (d)(2)(A).
Subsec. (d)(3).
"(A) has a State ceiling (as defined in section 103A(g)(4)) for the year an election is made that exceeds 20 percent of the average annual aggregate principal amount of mortgages executed during the immediately preceding 3 calendar years for single family owner-occupied residences located within the jurisdiction of such State, or
"(B) issued qualified mortgage bonds in an aggregate amount less than $150,000,000 for calendar year 1983,
the certificate credit rate for any mortgage credit certificate shall not exceed 20 percent unless the issuing authority submits a plan to the Secretary to ensure that the weighted average of the certificate credit rates in such mortgage credit certificate program does not exceed 20 percent and the Secretary approves such plan."
Subsec. (e)(1)(B).
Subsec. (e)(2).
Subsec. (e)(6).
Subsec. (e)(8)(A).
Subsec. (e)(8)(B).
Subsec. (e)(9).
Subsec. (e)(10).
Subsec. (f)(1).
Subsec. (f)(2)(A).
Subsec. (f)(3).
Subsec. (f)(4).
Statutory Notes and Related Subsidiaries
Effective Date of 2013 Amendment
Amendment by
Effective and Termination Dates of 2010 Amendment
Amendment by
Amendment by
Effective Date of 2009 Amendment
Amendment by section 1004(b)(2) of
Amendment by section 1142(b)(1)(B) of
Amendment by section 1144(b)(1)(B) of
Effective Date of 2008 Amendment
Amendment by
Effective and Termination Dates of 2005 Amendment
Amendment by section 402(i)(3)(C) of
The Internal Revenue Code of 1986 to be applied and administered as if the amendments made by section 1335(b)(1)–(3) of
Amendments by
Amendment by
Effective Date of 2001 Amendment
Amendment by
Amendment by
Amendment by section 201(b)(2)(F) of
Amendment by section 618(b)(2)(B) of
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1997 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by
Effective Date of 1993 Amendment
Effective Date of 1991 Amendment
Effective Date of 1990 Amendment
Amendment by
Effective Date of 1988 Amendment
Amendment by section 1013(a)(25), (26) of
Amendment by section 4005(a)(2) of
Amendment by section 4005(g)(7) of
Effective Date of 1986 Amendment
Amendment by section 1301(f)(1) of
Amendment by section 1862(a)–(d)(1) of
Effective Date
"(1)
"(2)
Savings Provision
Amendment by
For provisions that nothing in amendment by
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
§25A. American Opportunity and Lifetime Learning credits
(a) Allowance of credit
In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year the amount equal to the sum of—
(1) the American Opportunity Tax Credit, plus
(2) the Lifetime Learning Credit.
(b) American Opportunity Tax Credit
(1) Per student credit
In the case of any eligible student for whom an election is in effect under this section for any taxable year, the American Opportunity Tax Credit is an amount equal to the sum of—
(A) 100 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to the eligible student during any academic period beginning in such taxable year) as does not exceed $2,000, plus
(B) 25 percent of such expenses so paid as exceeds $2,000 but does not exceed $4,000.
(2) Limitations applicable to American Opportunity Tax Credit
(A) Credit allowed only for 4 taxable years
An election to have this section apply with respect to any eligible student for purposes of the American Opportunity Tax Credit under subsection (a)(1) may not be made for any taxable year if such an election (by the taxpayer or any other individual) is in effect with respect to such student for any 4 prior taxable years.
(B) Credit allowed for year only if individual is at least ½ time student for portion of year
The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for a taxable year with respect to the qualified tuition and related expenses of an individual unless such individual is an eligible student for at least one academic period which begins during such year.
(C) Credit allowed only for first 4 years of postsecondary education
The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for a taxable year with respect to the qualified tuition and related expenses of an eligible student if the student has completed (before the beginning of such taxable year) the first 4 years of postsecondary education at an eligible educational institution.
(D) Denial of credit if student convicted of a felony drug offense
The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for qualified tuition and related expenses for the enrollment or attendance of a student for any academic period if such student has been convicted of a Federal or State felony offense consisting of the possession or distribution of a controlled substance before the end of the taxable year with or within which such period ends.
(3) Eligible student
For purposes of this subsection, the term "eligible student" means, with respect to any academic period, a student who—
(A) meets the requirements of section 484(a)(1) of the Higher Education Act of 1965 (
(B) is carrying at least ½ the normal full-time work load for the course of study the student is pursuing.
(4) Restrictions on taxpayers who improperly claimed American Opportunity Tax Credit in prior years
(A) Taxpayers making prior fraudulent or reckless claims
(i) In general
No American Opportunity Tax Credit shall be allowed under this section for any taxable year in the disallowance period.
(ii) Disallowance period
For purposes of subparagraph (A), the disallowance period is—
(I) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of the American Opportunity Tax Credit under this section was due to fraud, and
(II) the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer's claim of the American Opportunity Tax Credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud).
(B) Taxpayers making improper prior claims
In the case of a taxpayer who is denied the American Opportunity Tax Credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of
(c) Lifetime Learning Credit
(1) Per taxpayer credit
The Lifetime Learning Credit for any taxpayer for any taxable year is an amount equal to 20 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished during any academic period beginning in such taxable year) as does not exceed $10,000.
(2) Special rules for determining expenses
(A) Coordination with American Opportunity Tax Credit
The qualified tuition and related expenses with respect to an individual who is an eligible student for whom a 1 American Opportunity Tax Credit under subsection (a)(1) is allowed for the taxable year shall not be taken into account under this subsection.
(B) Expenses eligible for Lifetime Learning Credit
For purposes of paragraph (1), qualified tuition and related expenses shall include expenses described in subsection (f)(1) with respect to any course of instruction at an eligible educational institution to acquire or improve job skills of the individual.
(d) Limitations based on modified adjusted gross income
(1) In general
The American Opportunity Tax Credit and the Lifetime Learning Credit shall each (determined without regard to this paragraph) be reduced (but not below zero) by the amount which bears the same ratio to each such credit (as so determined) as—
(A) the excess of—
(i) the taxpayer's modified adjusted gross income for such taxable year, over
(ii) $80,000 ($160,000 in the case of a joint return), bears to
(B) $10,000 ($20,000 in the case of a joint return).
(2) Modified adjusted gross income
For purposes of this subsection, the term "modified adjusted gross income" means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933.
(e) Election not to have section apply
A taxpayer may elect not to have this section apply with respect to the qualified tuition and related expenses of an individual for any taxable year.
(f) Definitions
For purposes of this section—
(1) Qualified tuition and related expenses
(A) In general
The term "qualified tuition and related expenses" means tuition and fees required for the enrollment or attendance of—
(i) the taxpayer,
(ii) the taxpayer's spouse, or
(iii) any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151,
at an eligible educational institution for courses of instruction of such individual at such institution.
(B) Exception for education involving sports, etc.
Such term does not include expenses with respect to any course or other education involving sports, games, or hobbies, unless such course or other education is part of the individual's degree program.
(C) Exception for nonacademic fees
Such term does not include student activity fees, athletic fees, insurance expenses, or other expenses unrelated to an individual's academic course of instruction.
(D) Required course materials taken into account for American Opportunity Tax Credit
For purposes of determining the American Opportunity Tax Credit, subparagraph (A) shall be applied by substituting "tuition, fees, and course materials" for "tuition and fees".
(2) Eligible educational institution
The term "eligible educational institution" means an institution—
(A) which is described in section 481 of the Higher Education Act of 1965 (
(B) which is eligible to participate in a program under title IV of such Act.
(g) Special rules
(1) Identification requirement
(A) In general
No credit shall be allowed under subsection (a) to a taxpayer with respect to the qualified tuition and related expenses of an individual unless the taxpayer includes the name and taxpayer identification number of such individual on the return of tax for the taxable year.
(B) Additional identification requirements with respect to American Opportunity Tax Credit
(i) Student
The requirements of subparagraph (A) shall not be treated as met with respect to the American Opportunity Tax Credit unless the individual's taxpayer identification number was issued on or before the due date for filing the return of tax for the taxable year.
(ii) Taxpayer
No American Opportunity Tax Credit shall be allowed under this section if the taxpayer identification number of the taxpayer was issued after the due date for filing the return for the taxable year.
(iii) Institution
No American Opportunity Tax Credit shall be allowed under this section unless the taxpayer includes the employer identification number of any institution to which qualified tuition and related expenses were paid with respect to the individual.
(2) Adjustment for certain scholarships, etc.
The amount of qualified tuition and related expenses otherwise taken into account under subsection (a) with respect to an individual for an academic period shall be reduced (before the application of subsections (b), (c), and (d)) by the sum of any amounts paid for the benefit of such individual which are allocable to such period as—
(A) a qualified scholarship which is excludable from gross income under section 117,
(B) an educational assistance allowance under
(C) a payment (other than a gift, bequest, devise, or inheritance within the meaning of section 102(a)) for such individual's educational expenses, or attributable to such individual's enrollment at an eligible educational institution, which is excludable from gross income under any law of the United States.
(3) Treatment of expenses paid by dependent
If a deduction under section 151 with respect to an individual is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins—
(A) no credit shall be allowed under subsection (a) to such individual for such individual's taxable year,
(B) qualified tuition and related expenses paid by such individual during such individual's taxable year shall be treated for purposes of this section as paid by such other taxpayer, and
(C) a statement described in paragraph (8) and received by such individual shall be treated as received by the taxpayer.
(4) Treatment of certain prepayments
If qualified tuition and related expenses are paid by the taxpayer during a taxable year for an academic period which begins during the first 3 months following such taxable year, such academic period shall be treated for purposes of this section as beginning during such taxable year.
(5) Denial of double benefit
No credit shall be allowed under this section for any expense for which a deduction is allowed under any other provision of this chapter.
(6) No credit for married individuals filing separate returns
If the taxpayer is a married individual (within the meaning of section 7703), this section shall apply only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.
(7) Nonresident aliens
If the taxpayer is a nonresident alien individual for any portion of the taxable year, this section shall apply only if such individual is treated as a resident alien of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013.
(8) Payee statement requirement
Except as otherwise provided by the Secretary, no credit shall be allowed under this section unless the taxpayer receives a statement furnished under section 6050S(d) which contains all of the information required by paragraph (2) thereof.
[(h) Repealed. Pub. L. 116–260, div. EE, title I, §104(a)(2), Dec. 27, 2020, 134 Stat. 3041 ]
(i) Portion of American Opportunity Tax Credit made refundable
Forty percent of so much of the credit allowed under subsection (a) as is attributable to the American Opportunity Tax Credit (determined after application of subsection (d) and without regard to this paragraph 2 and section 26(a)) shall be treated as a credit allowable under subpart C (and not allowed under subsection (a)). The preceding sentence shall not apply to any taxpayer for any taxable year if such taxpayer is a child to whom subsection (g) of section 1 applies for such taxable year.
(j) Regulations
The Secretary may prescribe such regulations as may be necessary or appropriate to carry out this section, including regulations providing for a recapture of the credit allowed under this section in cases where there is a refund in a subsequent taxable year of any amount which was taken into account in determining the amount of such credit.
(Added
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Editorial Notes
References in Text
The date of the enactment of this section, referred to in subsecs. (b)(3)(A) and (f)(2)(A), is the date of enactment of
The Higher Education Act of 1965, referred to in subsec. (f)(2)(B), is
Amendments
2020—Subsec. (d).
Subsec. (h).
2018—
Subsec. (b).
Subsec. (b)(1)(A).
Subsec. (b)(1)(B).
Subsec. (b)(2).
Subsec. (b)(2)(A), (C).
Subsec. (b)(4).
Subsec. (c)(1).
Subsec. (c)(2)(A).
Subsec. (d).
Subsec. (f)(1)(D).
Subsec. (g)(1).
Subsec. (h).
Subsec. (i).
2017—Subsec. (h)(1)(A)(ii), (2)(A)(ii).
2015—Subsec. (g)(3)(C).
Subsec. (g)(8).
Subsec. (i).
Subsec. (i)(6).
Subsec. (i)(6)(C).
Subsec. (i)(7).
2014—Subsec. (i)(3).
2013—Subsec. (i).
Subsec. (i)(5) to (7).
2010—Subsec. (i).
Subsec. (i)(5)(B).
2009—Subsecs. (i), (j).
2001—Subsec. (e).
"(1)
"(2)
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Effective Date of 2018 Amendment
Amendment by section 101(l)(1) to (9), (11) to (14) of
Effective Date of 2017 Amendment
Amendment by
Effective Date of 2015 Amendment
"(1)
"(2)
Amendment by section 208(a)(2) of
Effective Date of 2014 Amendment
Amendment by
Effective Date of 2013 Amendment
Amendment by section 103(a)(1) of
Amendment by section 104(c)(2)(D) of
Effective and Termination Dates of 2010 Amendment
Amendment by section 103(a)(1) of
Amendment by
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2001 Amendment
Effective Date
"(1)
"(2)
Savings Provision
For provisions that nothing in amendment by section 401(b)(1) of
Treatment of Possessions
"(1)
"(A)
"(B)
"(2)
"(3)
"(A)
"(B)
"(C)
[Amendments by
1 So in original. Probably should be "an".
2 So in original. Probably should be "this subsection".
§25B. Elective deferrals and IRA contributions by certain individuals
(a) Allowance of credit
In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the applicable percentage of so much of the qualified retirement savings contributions of the eligible individual for the taxable year as do not exceed $2,000.
(b) Applicable percentage
For purposes of this section—
(1) Joint returns
In the case of a joint return, the applicable percentage is—
(A) if the adjusted gross income of the taxpayer is not over $30,000, 50 percent,
(B) if the adjusted gross income of the taxpayer is over $30,000 but not over $32,500, 20 percent,
(C) if the adjusted gross income of the taxpayer is over $32,500 but not over $50,000, 10 percent, and
(D) if the adjusted gross income of the taxpayer is over $50,000, zero percent.
(2) Other returns
In the case of—
(A) a head of household, the applicable percentage shall be determined under paragraph (1) except that such paragraph shall be applied by substituting for each dollar amount therein (as adjusted under paragraph (3)) a dollar amount equal to 75 percent of such dollar amount, and
(B) any taxpayer not described in paragraph (1) or subparagraph (A), the applicable percentage shall be determined under paragraph (1) except that such paragraph shall be applied by substituting for each dollar amount therein (as adjusted under paragraph (3)) a dollar amount equal to 50 percent of such dollar amount.
(3) Inflation adjustment
In the case of any taxable year beginning in a calendar year after 2006, each of the dollar amounts in paragraph (1) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting "calendar year 2005" for "calendar year 2016" in subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $500.
(c) Eligible individual
For purposes of this section—
(1) In general
The term "eligible individual" means any individual if such individual has attained the age of 18 as of the close of the taxable year.
(2) Dependents and full-time students not eligible
The term "eligible individual" shall not include—
(A) any individual with respect to whom a deduction under section 151 is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins, and
(B) any individual who is a student (as defined in section 152(f)(2)).
(d) Qualified retirement savings contributions
For purposes of this section—
(1) In general
The term "qualified retirement savings contributions" means, with respect to any taxable year, the sum of—
(A) the amount of the qualified retirement contributions (as defined in section 219(e)) made by the eligible individual,
(B) the amount of—
(i) any elective deferrals (as defined in section 402(g)(3)) of such individual, and
(ii) any elective deferral of compensation by such individual under an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A),
(C) the amount of voluntary employee contributions by such individual to any qualified retirement plan (as defined in section 4974(c)), and
(D) the amount of contributions made before January 1, 2026, by such individual to the ABLE account (within the meaning of section 529A) of which such individual is the designated beneficiary.
(2) Reduction for certain distributions
(A) In general
The qualified retirement savings contributions determined under paragraph (1) shall be reduced (but not below zero) by the aggregate distributions received by the individual during the testing period from any entity of a type to which contributions under paragraph (1) may be made. The preceding sentence shall not apply to the portion of any distribution which is not includible in gross income by reason of a trustee-to-trustee transfer or a rollover distribution.
(B) Testing period
For purposes of subparagraph (A), the testing period, with respect to a taxable year, is the period which includes—
(i) such taxable year,
(ii) the 2 preceding taxable years, and
(iii) the period after such taxable year and before the due date (including extensions) for filing the return of tax for such taxable year.
(C) Excepted distributions
There shall not be taken into account under subparagraph (A)—
(i) any distribution referred to in section 72(p), 401(k)(8), 401(m)(6), 402(g)(2), 404(k), or 408(d)(4), and
(ii) any distribution to which section 408A(d)(3) applies.
(D) Treatment of distributions received by spouse of individual
For purposes of determining distributions received by an individual under subparagraph (A) for any taxable year, any distribution received by the spouse of such individual shall be treated as received by such individual if such individual and spouse file a joint return for such taxable year and for the taxable year during which the spouse receives the distribution.
(e) Adjusted gross income
For purposes of this section, adjusted gross income shall be determined without regard to sections 911, 931, and 933.
(f) Investment in the contract
Notwithstanding any other provision of law, a qualified retirement savings contribution shall not fail to be included in determining the investment in the contract for purposes of section 72 by reason of the credit under this section.
(Added and amended
Amendment of Subsection (d)(1)
Inflation Adjusted Items for Certain Years
For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under
Editorial Notes
Amendments
2022—Subsec. (d)(1).
"(A) the amount of the qualified retirement contributions (as defined in section 219(e)) made by the eligible individual,
"(B) the amount of—
"(i) any elective deferrals (as defined in section 402(g)(3)) of such individual, and
"(ii) any elective deferral of compensation by such individual under an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A),
"(C) the amount of voluntary employee contributions by such individual to any qualified retirement plan (as defined in section 4974(c)), and
"(D) the amount of contributions made before January 1, 2026".
2017—Subsec. (b)(3)(B).
Subsec. (d)(1)(D).
2013—Subsec. (g).
"(1) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
"(2) the sum of the credits allowable under this subpart (other than this section and sections 23, 25A(i), 25D, 30, 30B, and 30D) and section 27 for the taxable year."
2010—Subsec. (g)(2).
2009—Subsec. (g)(2).
2008—Subsec. (g)(2).
2006—Subsec. (b).
Subsec. (h).
2005—Subsec. (g).
2004—Subsec. (c)(2)(B).
2002—Subsec. (d)(2)(A).
"(i) any distribution from a qualified retirement plan (as defined in section 4974(c)), or from an eligible deferred compensation plan (as defined in section 457(b)), received by the individual during the testing period which is includible in gross income, and
"(ii) any distribution from a Roth IRA or a Roth account received by the individual during the testing period which is not a qualified rollover contribution (as defined in section 408A(e)) to a Roth IRA or a rollover under section 402(c)(8)(B) to a Roth account."
Subsecs. (g), (h).
2001—Subsec. (g).
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment
Amendment by
Effective Date of 2013 Amendment
Amendment by
Effective and Termination Dates of 2010 Amendment
Amendment by
Amendment by
Effective Date of 2017 Amendment
Amendment by section 11002(d)(1)(C) of
Effective Date of 2009 Amendment
Amendment by section 1004(b)(4) of
Amendment by section 1142(b)(1)(C) of
Amendment by section 1144(b)(1)(C) of
Effective Date of 2008 Amendment
Amendment by section 106(e)(2)(C) of
Amendment by section 205(d)(1)(C) of
Effective Date of 2006 Amendment
Effective and Termination Dates of 2005 Amendment
Amendment by
Amendment by
Effective Date of 2004 Amendment
Amendment by
Effective Date of 2002 Amendment
Effective Date
Amendment by section 618(b)(1) of
Amendment by section 618(b)(1) of
Amendment by section 618(b)(1) of
§25C. Energy efficient home improvement credit
(a) Allowance of credit
In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent of the sum of—
(1) the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during such taxable year,
(2) the amount of the residential energy property expenditures paid or incurred by the taxpayer during such taxable year, and
(3) the amount paid or incurred by the taxpayer during the taxable year for home energy audits.
(b) Limitations
(1) In general
The credit allowed under this section with respect to any taxpayer for any taxable year shall not exceed $1,200.
(2) Energy property
The credit allowed under this section by reason of subsection (a)(2) with respect to any taxpayer for any taxable year shall not exceed, with respect to any item of qualified energy property, $600.
(3) Windows
The credit allowed under this section by reason of subsection (a)(1) with respect to any taxpayer for any taxable year shall not exceed, in the aggregate with respect to all exterior windows and skylights, $600.
(4) Doors
The credit allowed under this section by reason of subsection (a)(1) with respect to any taxpayer for any taxable year shall not exceed—
(A) $250 in the case of any exterior door, and
(B) $500 in the aggregate with respect to all exterior doors.
(5) Heat pump and heat pump water heaters; biomass stoves and boilers
Notwithstanding paragraphs (1) and (2), the credit allowed under this section by reason of subsection (a)(2) with respect to any taxpayer for any taxable year shall not, in the aggregate, exceed $2,000 with respect to amounts paid or incurred for property described in clauses (i) and (ii) of subsection (d)(2)(A) and in subsection (d)(2)(B).
(6) Home energy audits
(A) Dollar limitation
The amount of the credit allowed under this section by reason of subsection (a)(3) shall not exceed $150.
(B) Substantiation requirement
No credit shall be allowed under this section by reason of subsection (a)(3) unless the taxpayer includes with the taxpayer's return of tax such information or documentation as the Secretary may require.
(c) Qualified energy efficiency improvements
For purposes of this section—
(1) In general
The term "qualified energy efficiency improvements" means any energy efficient building envelope component, if—
(A) such component is installed in or on a dwelling unit located in the United States and owned and used by the taxpayer as the taxpayer's principal residence (within the meaning of section 121),
(B) the original use of such component commences with the taxpayer, and
(C) such component reasonably can be expected to remain in use for at least 5 years.
(2) Energy efficient building envelope component
The term "energy efficient building envelope component" means a building envelope component which meets—
(A) in the case of an exterior window or skylight, Energy Star most efficient certification requirements,
(B) in the case of an exterior door, applicable Energy Star requirements, and
(C) in the case of any other component, the prescriptive criteria for such component established by the most recent International Energy Conservation Code standard in effect as of the beginning of the calendar year which is 2 years prior to the calendar year in which such component is placed in service.
(3) Building envelope component
The term "building envelope component" means—
(A) any insulation material or system, including air sealing material or system, which is specifically and primarily designed to reduce the heat loss or gain of a dwelling unit when installed in or on such dwelling unit,
(B) exterior windows (including skylights), and
(C) exterior doors.
(4) Manufactured homes included
The term "dwelling unit" includes a manufactured home which conforms to Federal Manufactured Home Construction and Safety Standards (part 3280 of title 24, Code of Federal Regulations).
(d) Residential energy property expenditures
For purposes of this section—
(1) In general
The term "residential energy property expenditures" means expenditures made by the taxpayer for qualified energy property which is—
(A) installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer, and
(B) originally placed in service by the taxpayer.
Such term includes expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property.
(2) Qualified energy property
The term "qualified energy property" means any of the following:
(A) Any of the following which meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which is in effect as of the beginning of the calendar year in which the property is placed in service:
(i) An electric or natural gas heat pump water heater.
(ii) An electric or natural gas heat pump.
(iii) A central air conditioner.
(iv) A natural gas, propane, or oil water heater.
(v) A natural gas, propane, or oil furnace or hot water boiler.
(B) A biomass stove or boiler which—
(i) uses the burning of biomass fuel to heat a dwelling unit located in the United States and used as a residence by the taxpayer, or to heat water for use in such a dwelling unit, and
(ii) has a thermal efficiency rating of at least 75 percent (measured by the higher heating value of the fuel).
(C) Any oil furnace or hot water boiler which—
(i) is placed in service after December 31, 2022, and before January 1, 2027, and—
(I) meets or exceeds 2021 Energy Star efficiency criteria, and
(II) is rated by the manufacturer for use with fuel blends at least 20 percent of the volume of which consists of an eligible fuel, or
(ii) is placed in service after December 31, 2026, and—
(I) achieves an annual fuel utilization efficiency rate of not less than 90, and
(II) is rated by the manufacturer for use with fuel blends at least 50 percent of the volume of which consists of an eligible fuel.
(D) Any improvement to, or replacement of, a panelboard, sub-panelboard, branch circuits, or feeders which—
(i) is installed in a manner consistent with the National Electric Code,
(ii) has a load capacity of not less than 200 amps,
(iii) is installed in conjunction with—
(I) any qualified energy efficiency improvements, or
(II) any qualified energy property described in subparagraphs (A) through (C) for which a credit is allowed under this section for expenditures with respect to such property, and
(iv) enables the installation and use of any property described in subclause (I) or (II) of clause (iii).
(3) Eligible fuel
For purposes of paragraph (2), the term "eligible fuel" means—
(A) biodiesel and renewable diesel (within the meaning of section 40A), and
(B) second generation biofuel (within the meaning of section 40).
(e) Home energy audits
For purposes of this section, the term "home energy audit" means an inspection and written report with respect to a dwelling unit located in the United States and owned or used by the taxpayer as the taxpayer's principal residence (within the meaning of section 121) which—
(1) identifies the most significant and cost-effective energy efficiency improvements with respect to such dwelling unit, including an estimate of the energy and cost savings with respect to each such improvement, and
(2) is conducted and prepared by a home energy auditor that meets the certification or other requirements specified by the Secretary in regulations or other guidance (as prescribed by the Secretary not later than 365 days after the date of the enactment of this subsection).
(f) Special rules
For purposes of this section—
(1) Application of rules
Rules similar to the rules under paragraphs (4), (5), (6), (7), and (8) of section 25D(e) shall apply.
(2) Joint ownership of energy items
(A) In general
Any expenditure otherwise qualifying as an expenditure under this section shall not be treated as failing to so qualify merely because such expenditure was made with respect to two or more dwelling units.
(B) Limits applied separately
In the case of any expenditure described in subparagraph (A), the amount of the credit allowable under subsection (a) shall (subject to paragraph (1)) be computed separately with respect to the amount of the expenditure made for each dwelling unit.
(3) Property financed by subsidized energy financing
For purposes of determining the amount of expenditures made by any individual with respect to any property, there shall not be taken into account expenditures which are made from subsidized energy financing (as defined in section 48(a)(4)(C)).
(g) Basis adjustments
For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
(h) Termination
This section shall not apply with respect to any property placed in service—
(1) after December 31, 2007, and before January 1, 2009, or
(2) after December 31, 2032.
(Added
Amendment of Section
(C) transportation fuel (as defined in section 45Z(d)(5)).
See 2022 Amendment note below.
(h) Product identification number requirement
(1) In general
No credit shall be allowed under subsection (a) with respect to any item of specified property placed in service after December 31, 2024, unless—
(A) such item is produced by a qualified manufacturer, and
(B) the taxpayer includes the qualified product identification number of such item on the return of tax for the taxable year.
(2) Qualified product identification number
For purposes of this section, the term "qualified product identification number" means, with respect to any item of specified property, the product identification number assigned to such item by the qualified manufacturer pursuant to the methodology referred to in paragraph (3).
(3) Qualified manufacturer
For purposes of this section, the term "qualified manufacturer" means any manufacturer of specified property which enters into an agreement with the Secretary which provides that such manufacturer will—
(A) assign a product identification number to each item of specified property produced by such manufacturer utilizing a methodology that will ensure that such number (including any alphanumeric) is unique to each such item (by utilizing numbers or letters which are unique to such manufacturer or by such other method as the Secretary may provide),
(B) label such item with such number in such manner as the Secretary may provide, and
(C) make periodic written reports to the Secretary (at such times and in such manner as the Secretary may provide) of the product identification numbers so assigned and including such information as the Secretary may require with respect to the item of specified property to which such number was so assigned.
(4) Specified property
For purposes of this subsection, the term "specified property" means any qualified energy property and any property described in subparagraph (B) or (C) of subsection (c)(3).
See 2022 Amendment note below.
Editorial Notes
Amendments
2022—
Subsec. (a).
"(1) 10 percent of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during such taxable year, and
"(2) the amount of the residential energy property expenditures paid or incurred by the taxpayer during such taxable year."
Subsec. (a)(3).
Subsec. (b).
"(1)
"(2)
"(3)
"(A) $50 for any advanced main air circulating fan,
"(B) $150 for any qualified natural gas, propane, or oil furnace or hot water boiler, and
"(C) $300 for any item of energy-efficient building property."
Subsec. (b)(6).
Subsec. (c)(2).
"(A) applicable Energy Star program requirements, in the case of a roof or roof products,
"(B) version 6.0 Energy Star program requirements, in the case of an exterior window, a skylight, or an exterior door, and
"(C) the prescriptive criteria for such component established by the 2009 International Energy Conservation Code, as such Code (including supplements) is in effect on the date of the enactment of the American Recovery and Reinvestment Tax Act of 2009, in the case of any other component."
Subsec. (c)(3)(A).
Subsec. (c)(3)(D).
Subsec. (d).
Subsec. (d)(3)(C).
Subsecs. (e) to (g).
Subsec. (g)(2).
Subsec. (h).
Subsec. (i).
2020—Subsec. (d)(3)(E).
Subsec. (d)(6).
Subsec. (g)(2).
2019—Subsec. (d)(3)(A).
Subsec. (d)(3)(D).
Subsec. (g)(2).
2018—Subsec. (b)(2).
Subsec. (d)(3)(B).
Subsec. (d)(3)(D).
Subsec. (g)(2).
2015—Subsec. (c)(1).
Subsec. (c)(2) to (4).
Subsec. (g)(2).
2014—Subsec. (g)(2).
2013—Subsec. (g)(2).
2010—Subsecs. (a), (b).
"(a)
"(1) the amount paid or incurred by the taxpayer during such taxable year for qualified energy efficiency improvements, and
"(2) the amount of the residential energy property expenditures paid or incurred by the taxpayer during such taxable year.
"(b)
Subsec. (c)(1).
Subsec. (c)(2)(A).
Subsec. (c)(4).
Subsec. (d)(2)(A)(ii).
Subsec. (d)(3)(E).
Subsec. (d)(4).
Subsec. (e)(3).
Subsec. (g)(2).
2009—Subsecs. (a), (b).
Subsec. (c)(2)(A).
Subsec. (c)(4).
Subsec. (d)(2)(A)(ii).
Subsec. (d)(3)(B).
Subsec. (d)(3)(C).
Subsec. (d)(3)(D).
Subsec. (d)(3)(E).
Subsec. (d)(4).
Subsec. (e)(1).
Subsec. (g)(2).
2008—Subsec. (c)(1).
Subsec. (c)(2)(D).
Subsec. (d)(2)(C).
Subsec. (d)(3)(C), (D).
"(i) in the case of a closed loop product, has an energy efficiency ratio (EER) of at least 14.1 and a heating coefficient of performance (COP) of at least 3.3,
"(ii) in the case of an open loop product, has an energy efficiency ratio (EER) of at least 16.2 and a heating coefficient of performance (COP) of at least 3.6, and
"(iii) in the case of a direct expansion (DX) product, has an energy efficiency ratio (EER) of at least 15 and a heating coefficient of performance (COP) of at least 3.5,".
Subsec. (d)(3)(E).
Subsec. (d)(3)(F).
Subsec. (d)(6).
Subsec. (g).
2007—Subsec. (c)(3).
2005—Subsec. (b)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment
"(1)
"(2)
"(3)
Amendment by section 13704(b)(1) of
Effective Date of 2020 Amendment
Effective Date of 2019 Amendment
Effective Date of 2018 Amendment
Effective Date of 2015 Amendment
"(1)
"(2)
Effective Date of 2014 Amendment
Effective Date of 2013 Amendment
Effective Date of 2010 Amendment
Effective Date of 2009 Amendment
"(1)
"(2)
"(1)
"(2)
Effective Date of 2008 Amendment
"(1)
"(2)
Effective Date
§25D. Residential clean energy credit
(a) Allowance of credit
In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the applicable percentages of—
(1) the qualified solar electric property expenditures,
(2) the qualified solar water heating property expenditures,
(3) the qualified fuel cell property expenditures,
(4) the qualified small wind energy property expenditures,
(5) the qualified geothermal heat pump property expenditures, and
(6) the qualified battery storage technology expenditures,
made by the taxpayer during such year.
(b) Limitations
(1) Maximum credit for fuel cells
In the case of any qualified fuel cell property expenditure, the credit allowed under subsection (a) (determined without regard to subsection (c)) for any taxable year shall not exceed $500 with respect to each half kilowatt of capacity of the qualified fuel cell property (as defined in section 48(c)(1)) to which such expenditure relates.
(2) Certification of solar water heating property
No credit shall be allowed under this section for an item of property described in subsection (d)(1) unless such property is certified for performance by the non-profit Solar Rating Certification Corporation or a comparable entity endorsed by the government of the State in which such property is installed.
(c) Carryforward of unused credit
If the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year.
(d) Definitions
For purposes of this section—
(1) Qualified solar water heating property expenditure
The term "qualified solar water heating property expenditure" means an expenditure for property to heat water for use in a dwelling unit located in the United States and used as a residence by the taxpayer if at least half of the energy used by such property for such purpose is derived from the sun.
(2) Qualified solar electric property expenditure
The term "qualified solar electric property expenditure" means an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer.
(3) Qualified fuel cell property expenditure
The term "qualified fuel cell property expenditure" means an expenditure for qualified fuel cell property (as defined in section 48(c)(1), without regard to subparagraph (D) thereof) installed on or in connection with a dwelling unit located in the United States and used as a principal residence (within the meaning of section 121) by the taxpayer.
(4) Qualified small wind energy property expenditure
The term "qualified small wind energy property expenditure" means an expenditure for property which uses a wind turbine to generate electricity for use in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.
(5) Qualified geothermal heat pump property expenditure
(A) In general
The term "qualified geothermal heat pump property expenditure" means an expenditure for qualified geothermal heat pump property installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.
(B) Qualified geothermal heat pump property
The term "qualified geothermal heat pump property" means any equipment which—
(i) uses the ground or ground water as a thermal energy source to heat the dwelling unit referred to in subparagraph (A) or as a thermal energy sink to cool such dwelling unit, and
(ii) meets the requirements of the Energy Star program which are in effect at the time that the expenditure for such equipment is made.
(6) Qualified battery storage technology expenditure
The term "qualified battery storage technology expenditure" means an expenditure for battery storage technology which—
(A) is installed in connection with a dwelling unit located in the United States and used as a residence by the taxpayer, and
(B) has a capacity of not less than 3 kilowatt hours.
(e) Special rules
For purposes of this section—
(1) Labor costs
Expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property described in subsection (d) and for piping or wiring to interconnect such property to the dwelling unit shall be taken into account for purposes of this section.
(2) Solar panels
No expenditure relating to a solar panel or other property installed as a roof (or portion thereof) shall fail to be treated as property described in paragraph (1) or (2) of subsection (d) solely because it constitutes a structural component of the structure on which it is installed.
(3) Swimming pools, etc., used as storage medium
Expenditures which are properly allocable to a swimming pool, hot tub, or any other energy storage medium which has a function other than the function of such storage shall not be taken into account for purposes of this section.
(4) Fuel cell expenditure limitations in case of joint occupancy
In the case of any dwelling unit with respect to which qualified fuel cell property expenditures are made and which is jointly occupied and used during any calendar year as a residence by two or more individuals, the following rules shall apply:
(A) Maximum expenditures for fuel cells
The maximum amount of such expenditures which may be taken into account under subsection (a) by all such individuals with respect to such dwelling unit during such calendar year shall be $1,667 in the case of each half kilowatt of capacity of qualified fuel cell property (as defined in section 48(c)(1)) with respect to which such expenditures relate.
(B) Allocation of expenditures
The expenditures allocated to any individual for the taxable year in which such calendar year ends shall be an amount equal to the lesser of—
(i) the amount of expenditures made by such individual with respect to such dwelling during such calendar year, or
(ii) the maximum amount of such expenditures set forth in subparagraph (A) multiplied by a fraction—
(I) the numerator of which is the amount of such expenditures with respect to such dwelling made by such individual during such calendar year, and
(II) the denominator of which is the total expenditures made by all such individuals with respect to such dwelling during such calendar year.
(5) Tenant-stockholder in cooperative housing corporation
In the case of an individual who is a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as defined in such section), such individual shall be treated as having made his tenant-stockholder's proportionate share (as defined in section 216(b)(3)) of any expenditures of such corporation.
(6) Condominiums
(A) In general
In the case of an individual who is a member of a condominium management association with respect to a condominium which the individual owns, such individual shall be treated as having made the individual's proportionate share of any expenditures of such association.
(B) Condominium management association
For purposes of this paragraph, the term "condominium management association" means an organization which meets the requirements of paragraph (1) of section 528(c) (other than subparagraph (E) thereof) with respect to a condominium project substantially all of the units of which are used as residences.
(7) Allocation in certain cases
If less than 80 percent of the use of an item is for nonbusiness purposes, only that portion of the expenditures for such item which is properly allocable to use for nonbusiness purposes shall be taken into account.
(8) When expenditure made; amount of expenditure
(A) In general
Except as provided in subparagraph (B), an expenditure with respect to an item shall be treated as made when the original installation of the item is completed.
(B) Expenditures part of building construction
In the case of an expenditure in connection with the construction or reconstruction of a structure, such expenditure shall be treated as made when the original use of the constructed or reconstructed structure by the taxpayer begins.
(f) Basis adjustments
For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
(g) Applicable percentage
For purposes of subsection (a), the applicable percentage shall be—
(1) in the case of property placed in service after December 31, 2016, and before January 1, 2020, 30 percent,
(2) in the case of property placed in service after December 31, 2019, and before January 1, 2022, 26 percent,
(3) in the case of property placed in service after December 31, 2021, and before January 1, 2033, 30 percent,
(4) in the case of property placed in service after December 31, 2032, and before January 1, 2034, 26 percent, and
(5) in the case of property placed in service after December 31, 2033, and before January 1, 2035, 22 percent.
(h) Termination
The credit allowed under this section shall not apply to property placed in service after December 31, 2034.
(Added
Editorial Notes
Amendments
2022—
Subsec. (a)(6).
Subsec. (d)(3).
Subsec. (d)(6).
"(A)
"(i) which uses the burning of biomass fuel to heat a dwelling unit located in the United States and used as a residence by the taxpayer, or to heat water for use in such a dwelling unit, and
"(ii) which has a thermal efficiency rating of at least 75 percent (measured by the higher heating value of the fuel).
"(B)
Subsec. (g)(2).
Subsec. (g)(3) to (5).
Subsec. (h).
2020—Subsec. (a)(6).
Subsec. (d)(6).
Subsec. (g)(2).
Subsec. (g)(3).
Subsec. (h).
2018—Subsec. (a).
"(1) the applicable percentage of the qualified solar electric property expenditures made by the taxpayer during such year,
"(2) the applicable percentage of the qualified solar water heating property expenditures made by the taxpayer during such year,
"(3) 30 percent of the qualified fuel cell property expenditures made by the taxpayer during such year,
"(4) 30 percent of the qualified small wind energy property expenditures made by the taxpayer during such year, and
"(5) 30 percent of the qualified geothermal heat pump property expenditures made by the taxpayer during such year."
Subsec. (g).
Subsec. (h).
2015—Subsec. (a)(1), (2).
Subsec. (g).
Subsec. (h).
2013—Subsec. (c).
2009—Subsec. (b)(1).
Subsec. (e)(4).
Subsec. (e)(4)(A).
Subsec. (e)(4)(C).
Subsec. (e)(9).
2008—Subsec. (a)(4).
Subsec. (a)(5).
Subsec. (b)(1).
Subsec. (b)(1)(D).
Subsec. (b)(1)(E).
Subsec. (c).
Subsec. (d)(4).
Subsec. (d)(5).
Subsec. (e)(4)(A).
Subsec. (e)(4)(A)(iv).
Subsec. (e)(4)(A)(v).
Subsec. (g).
2006—Subsecs. (a)(1), (b)(1)(A).
Subsec. (d)(2).
Subsec. (e)(4)(A)(i).
Subsec. (g).
2005—Subsec. (b)(1).
Subsec. (c).
Subsec. (e)(4)(A), (B).
"(A) The amount of the credit allowable, under subsection (a) by reason of expenditures (as the case may be) made during such calendar year by any of such individuals with respect to such dwelling unit shall be determined by treating all of such individuals as 1 taxpayer whose taxable year is such calendar year.
"(B) There shall be allowable, with respect to such expenditures to each of such individuals, a credit under subsection (a) for the taxable year in which such calendar year ends in an amount which bears the same ratio to the amount determined under subparagraph (A) as the amount of such expenditures made by such individual during such calendar year bears to the aggregate of such expenditures made by all of such individuals during such calendar year."
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment
"(1)
"(2)
Effective Date of 2020 Amendment
Amendment by section 148(b) of
Effective Date of 2018 Amendment
Effective Date of 2015 Amendment
Effective Date of 2013 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by section 1103(b)(2)(B) of
Effective Date of 2008 Amendment
Amendment by
Effective and Termination Dates of 2005 Amendment
Amendment by section 402(i)(3)(E) of
Amendments by
Effective Date
Section applicable to property placed in service after Dec. 31, 2005, in taxable years ending after such date, see section 1335(c) of
§25E. Previously-owned clean vehicles
(a) Allowance of credit
In the case of a qualified buyer who during a taxable year places in service a previously-owned clean vehicle, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the lesser of—
(1) $4,000, or
(2) the amount equal to 30 percent of the sale price with respect to such vehicle.
(b) Limitation based on modified adjusted gross income
(1) In general
No credit shall be allowed under subsection (a) for any taxable year if—
(A) the lesser of—
(i) the modified adjusted gross income of the taxpayer for such taxable year, or
(ii) the modified adjusted gross income of the taxpayer for the preceding taxable year, exceeds
(B) the threshold amount.
(2) Threshold amount
For purposes of paragraph (1)(B), the threshold amount shall be—
(A) in the case of a joint return or a surviving spouse (as defined in section 2(a)), $150,000,
(B) in the case of a head of household (as defined in section 2(b)), $112,500, and
(C) in the case of a taxpayer not described in subparagraph (A) or (B), $75,000.
(3) Modified adjusted gross income
For purposes of this subsection, the term "modified adjusted gross income" means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.
(c) Definitions
For purposes of this section—
(1) Previously-owned clean vehicle
The term "previously-owned clean vehicle" means, with respect to a taxpayer, a motor vehicle—
(A) the model year of which is at least 2 years earlier than the calendar year in which the taxpayer acquires such vehicle,
(B) the original use of which commences with a person other than the taxpayer,
(C) which is acquired by the taxpayer in a qualified sale, and
(D) which—
(i) meets the requirements of subparagraphs (C), (D), (E), (F), and (H) (except for clause (iv) thereof) of section 30D(d)(1), or
(ii) is a motor vehicle which—
(I) satisfies the requirements under subparagraphs (A) and (B) of section 30B(b)(3), and
(II) has a gross vehicle weight rating of less than 14,000 pounds.
(2) Qualified sale
The term "qualified sale" means a sale of a motor vehicle—
(A) by a dealer (as defined in section 30D(g)(8)),
(B) for a sale price which does not exceed $25,000, and
(C) which is the first transfer since the date of the enactment of this section to a qualified buyer other than the person with whom the original use of such vehicle commenced.
(3) Qualified buyer
The term "qualified buyer" means, with respect to a sale of a motor vehicle, a taxpayer—
(A) who is an individual,
(B) who purchases such vehicle for use and not for resale,
(C) with respect to whom no deduction is allowable with respect to another taxpayer under section 151, and
(D) who has not been allowed a credit under this section for any sale during the 3-year period ending on the date of the sale of such vehicle.
(4) Motor vehicle; capacity
The terms "motor vehicle" and "capacity" have the meaning given such terms in paragraphs (2) and (4) of section 30D(d), respectively.
(d) VIN number requirement
No credit shall be allowed under subsection (a) with respect to any vehicle unless the taxpayer includes the vehicle identification number of such vehicle on the return of tax for the taxable year.
(e) Application of certain rules
For purposes of this section, rules similar to the rules of section 30D(f) (without regard to paragraph (10) or (11) thereof) shall apply for purposes of this section.
(f) Termination
No credit shall be allowed under this section with respect to any vehicle acquired after December 31, 2032.
(Added and amended
Amendment of Section
(f) Transfer of credit
Rules similar to the rules of section 30D(g) shall apply.
See 2022 Amendment note below.
Editorial Notes
Amendments
2022—Subsecs. (f), (g).
Statutory Notes and Related Subsidiaries
Effective Date
"(1)
"(2)
§26. Limitation based on tax liability; definition of tax liability
(a) Limitation based on amount of tax
The aggregate amount of credits allowed by this subpart for the taxable year shall not exceed the sum of—
(1) the taxpayer's regular tax liability for the taxable year reduced by the foreign tax credit allowable under section 27, and
(2) the tax imposed by section 55(a) for the taxable year.
(b) Regular tax liability
For purposes of this part—
(1) In general
The term "regular tax liability" means the tax imposed by this chapter for the taxable year.
(2) Exception for certain taxes
For purposes of paragraph (1), any tax imposed by any of the following provisions shall not be treated as tax imposed by this chapter:
(A) section 55 (relating to minimum tax),
(B) section 59A (relating to base erosion and anti-abuse tax),
(C) subsection (m)(5)(B), (q), (t), or (v) of section 72 (relating to additional taxes on certain distributions),
(D) section 143(m) (relating to recapture of proration of Federal subsidy from use of mortgage bonds and mortgage credit certificates),
(E) section 530(d)(4) (relating to additional tax on certain distributions from Coverdell education savings accounts),
(F) section 531 (relating to accumulated earnings tax),
(G) section 541 (relating to personal holding company tax),
(H) section 1351(d)(1) (relating to recoveries of foreign expropriation losses),
(I) section 1374 (relating to tax on certain built-in gains of S corporations),
(J) section 1375 (relating to tax imposed when passive investment income of corporation having subchapter C earnings and profits exceeds 25 percent of gross receipts),
(K) subparagraph (A) of section 7518(g)(6) (relating to nonqualified withdrawals from capital construction funds taxed at highest marginal rate),
(L) sections 871(a) and 881 (relating to certain income of nonresident aliens and foreign corporations),
(M) section 860E(e) (relating to taxes with respect to certain residual interests),
(N) section 884 (relating to branch profits tax),
(O) sections 453(l)(3) and 453A(c) (relating to interest on certain deferred tax liabilities),
[(P) Repealed.
(Q) section 220(f)(4) (relating to additional tax on Archer MSA distributions not used for qualified medical expenses),
(R) section 138(c)(2) (relating to penalty for distributions from Medicare Advantage MSA not used for qualified medical expenses if minimum balance not maintained),
(S) sections 106(e)(3)(A)(ii), 223(b)(8)(B)(i)(II), and 408(d)(9)(D)(i)(II) (relating to certain failures to maintain high deductible health plan coverage),
(T) section 170(o)(3)(B) (relating to recapture of certain deductions for fractional gifts),
(U) section 223(f)(4) (relating to additional tax on health savings account distributions not used for qualified medical expenses),
(V) subsections (a)(1)(B)(i) and (b)(4)(A) of section 409A (relating to interest and additional tax with respect to certain deferred compensation),
(W) section 36(f) (relating to recapture of homebuyer credit),
(X) section 457A(c)(1)(B) (relating to determinability of amounts of compensation),
(Y) section 529A(c)(3)(A) (relating to additional tax on ABLE account distributions not used for qualified disability expenses), and
(Z) section 24(j)(2) (relating to excess advance payments).
(c) Tentative minimum tax
For purposes of this part, the term "tentative minimum tax" means the amount determined under section 55(b)(1).
(Added §25, renumbered §26,
Editorial Notes
Amendments
2021—Subsec. (b)(2)(Z).
2018—Subsec. (a)(1).
Subsec. (b)(2)(P).
2017—Subsec. (b)(2)(B).
2014—Subsec. (b)(2)(B).
Subsec. (b)(2)(Y).
2013—Subsec. (a).
2010—Subsec. (a)(1).
Subsec. (a)(2).
2009—Subsec. (a)(1).
Subsec. (a)(2).
2008—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (b)(2)(W).
Subsec. (b)(2)(X).
2007—Subsec. (a)(2).
Subsec. (b)(2)(S) to (V).
2006—Subsec. (a)(2).
2005—Subsec. (b)(2)(E).
Subsec. (b)(2)(T).
2004—Subsec. (a)(2).
Subsec. (b)(2)(R).
Subsec. (b)(2)(S).
2002—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (b)(2)(P), (Q).
Subsec. (b)(2)(R).
2001—Subsec. (a)(1).
Subsec. (b)(2)(E).
2000—Subsec. (b)(2)(Q).
1999—Subsec. (a).
"(1) the taxpayer's regular tax liability for the taxable year, over
"(2) the tentative minimum tax for the taxable year (determined without regard to the alternative minimum tax foreign tax credit).
For purposes of paragraph (2), the taxpayer's tentative minimum tax for any taxable year beginning during 1998 shall be treated as being zero."
1998—Subsec. (a).
1997—Subsec. (b)(2)(E) to (O).
Subsec. (b)(2)(P).
Subsec. (b)(2)(Q).
1996—Subsec. (b)(2)(O).
1989—Subsec. (b)(2)(C), (D).
"(C) subsection (m)(5)(B) (q), or (v) of section 72 (relating to additional tax on certain distributions),
"(D) section 72(t) (relating to 10-percent additional tax on early distributions from qualified retirement plans),".
Subsec. (b)(2)(K).
Subsec. (b)(2)(L), (M).
"(L) section 860E(e) (relating to taxes with respect to certain residual interests), and
"(L) section 884 (relating to branch profits tax), and
"(M) section 143(m) (relating to recapture of portion of federal subsidy from use of mortgage bonds and mortgage credit certificates)."
Subsec. (b)(2)(N).
1988—Subsec. (b)(2)(C).
Subsec. (b)(2)(D).
Subsec. (b)(2)(K).
Subsec. (b)(2)(L).
Subsec. (b)(2)(M).
1986—Subsec. (a).
Subsec. (b).
Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2021 Amendment
Amendment by
Effective Date of 2017 Amendment
Effective Date of 2014 Amendment
Amendment by section 221(a)(12)(B) of
Amendment by section 102(e)(1) of
Effective Date of 2013 Amendment
Amendment by
Effective and Termination Dates of 2010 Amendment
Amendment by
Amendment by
Effective Date of 2009 Amendment
Amendment by section 1004(b)(3) of
Amendment by section 1142(b)(1)(D) of
Amendment by section 1144(b)(1)(D) of
Effective Date of 2008 Amendment
Amendment by section 106(e)(2)(D) of
Amendment by section 205(d)(1)(D) of
Amendment by section 801(b) of
Effective Date of 2007 Amendment
Effective Date of 2006 Amendment
Effective Date of 2005 Amendment
Effective Date of 2004 Amendment
Effective Date of 2002 Amendment
Effective Date of 2001 Amendment
Amendment by
Amendment by
Amendment by section 201(b)(2)(D) of
Amendment by section 202(f)(2)(C) of
Amendment by section 618(b)(2)(C) of
Effective Date of 1999 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1997 Amendment
Effective Date of 1996 Amendment
Effective Date of 1989 Amendment
Amendment by section 7811(c)(1), (2) of
Effective Date of 1988 Amendment
Amendment by section 1006(t)(16)(C) of
Amendment by sections 1007(g)(1), 1011A(c)(10), and 1012(q)(8) of
Amendment by section 4005(g)(4) of
Amendment by section 5012(b)(2) of
Effective Date of 1986 Amendment
Amendment by section 261(c) of
Amendment by section 632(c)(1) of
Amendment by section 632(c)(1) of
Amendment by section 701(c)(1) of
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from such years, see section 475(a) of
Savings Provision
For provisions that nothing in amendment by
Applicability of Certain Amendments by Public Law 99–514 in Relation to Treaty Obligations of United States
For applicability of amendment by section 701(c)(1) of
Treatment of Tax Imposed Under Former Section 409(c)
Subpart B—Other Credits
Editorial Notes
Amendments
2022—
2018—
2014—
2009—
2008—
2005—
1997—
1996—
1992—
1986—
1984—
§27. Taxes of foreign countries and possessions of the United States
The amount of taxes imposed by foreign countries and possessions of the United States shall be allowed as a credit against the tax imposed by this chapter to the extent provided in section 901 1
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
2018—
1984—
1976—
Statutory Notes and Related Subsidiaries
Effective Date of 1976 Amendment
"(1) Except as provided by paragraph (2), the amendments made by this section [enacting
"(2) The amendment made by subsection (d)(2) [amending
Savings Provision
For provisions that nothing in amendment by
1 So in original. Probably should be followed by a period.
[§28. Renumbered §45C]
[§29. Renumbered §45K]
[§30. Repealed. Pub. L. 113–295, div. A, title II, §221(a)(2)(A), Dec. 19, 2014, 128 Stat. 4037 ]
Section, added
A prior section 30 was renumbered
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of
[§30A. Repealed. Pub. L. 115–141, div. U, title IV, §401(d)(1)(B), Mar. 23, 2018, 132 Stat. 1206 ]
Section, added
Statutory Notes and Related Subsidiaries
Savings Provision
For provisions that nothing in repeal by
American Samoa Economic Development Credit
"(a)
"(1) in the case of a taxable year beginning before January 1, 2012, such corporation—
"(A) is an existing credit claimant with respect to American Samoa, and
"(B) elected the application of [former] section 936 of the Internal Revenue Code of 1986 for its last taxable year beginning before January 1, 2006, and
"(2) in the case of a taxable year beginning after December 31, 2011, such corporation meets the requirements of subsection (e).
"(b)
"(1)
"(2)
"(3)
"(c)
"(d)
"(1) in the case of a corporation that meets the requirements of subparagraphs (A) and (B) of subsection (a)(1), to the first 16 taxable years of such corporation which begin after December 31, 2006, and before January 1, 2022, and
"(2) in the case of a corporation that does not meet the requirements of subparagraphs (A) and (B) of subsection (a)(1), to the first 10 taxable years of such corporation which begin after December 31, 2011, and before January 1, 2022.
In the case of a corporation described in subsection (a)(2), the Internal Revenue Code of 1986 shall be applied and administered without regard to the amendments made by section 401(d)(1) of the Tax Technical Corrections Act of 2018 [div. U of
"(e)
[
[
[
[
[
[
[
[
§30B. Alternative motor vehicle credit
(a) Allowance of credit
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of—
(1) the new qualified fuel cell motor vehicle credit determined under subsection (b),
(2) the new advanced lean burn technology motor vehicle credit determined under subsection (c),
(3) the new qualified hybrid motor vehicle credit determined under subsection (d),
(4) the new qualified alternative fuel motor vehicle credit determined under subsection (e), and
(5) the plug-in conversion credit determined under subsection (i).
(b) New qualified fuel cell motor vehicle credit
(1) In general
For purposes of subsection (a), the new qualified fuel cell motor vehicle credit determined under this subsection with respect to a new qualified fuel cell motor vehicle placed in service by the taxpayer during the taxable year is—
(A) $8,000 ($4,000 in the case of a vehicle placed in service after December 31, 2009), if such vehicle has a gross vehicle weight rating of not more than 8,500 pounds,
(B) $10,000, if such vehicle has a gross vehicle weight rating of more than 8,500 pounds but not more than 14,000 pounds,
(C) $20,000, if such vehicle has a gross vehicle weight rating of more than 14,000 pounds but not more than 26,000 pounds, and
(D) $40,000, if such vehicle has a gross vehicle weight rating of more than 26,000 pounds.
(2) Increase for fuel efficiency
(A) In general
The amount determined under paragraph (1)(A) with respect to a new qualified fuel cell motor vehicle which is a passenger automobile or light truck shall be increased by—
(i) $1,000, if such vehicle achieves at least 150 percent but less than 175 percent of the 2002 model year city fuel economy,
(ii) $1,500, if such vehicle achieves at least 175 percent but less than 200 percent of the 2002 model year city fuel economy,
(iii) $2,000, if such vehicle achieves at least 200 percent but less than 225 percent of the 2002 model year city fuel economy,
(iv) $2,500, if such vehicle achieves at least 225 percent but less than 250 percent of the 2002 model year city fuel economy,
(v) $3,000, if such vehicle achieves at least 250 percent but less than 275 percent of the 2002 model year city fuel economy,
(vi) $3,500, if such vehicle achieves at least 275 percent but less than 300 percent of the 2002 model year city fuel economy, and
(vii) $4,000, if such vehicle achieves at least 300 percent of the 2002 model year city fuel economy.
(B) 2002 model year city fuel economy
For purposes of subparagraph (A), the 2002 model year city fuel economy with respect to a vehicle shall be determined in accordance with the following tables:
(i) In the case of a passenger automobile:
| If vehicle inertia weight class is: | The 2002 model year city fuel economy is: |
|---|---|
| 1,500 or 1,750 lbs | 45.2 mpg |
| 2,000 lbs | 39.6 mpg |
| 2,250 lbs | 35.2 mpg |
| 2,500 lbs | 31.7 mpg |
| 2,750 lbs | 28.8 mpg |
| 3,000 lbs | 26.4 mpg |
| 3,500 lbs | 22.6 mpg |
| 4,000 lbs | 19.8 mpg |
| 4,500 lbs | 17.6 mpg |
| 5,000 lbs | 15.9 mpg |
| 5,500 lbs | 14.4 mpg |
| 6,000 lbs | 13.2 mpg |
| 6,500 lbs | 12.2 mpg |
| 7,000 to 8,500 lbs | 11.3 mpg. |
(ii) In the case of a light truck:
| If vehicle inertia weight class is: | The 2002 model year city fuel economy is: |
|---|---|
| 1,500 or 1,750 lbs | 39.4 mpg |
| 2,000 lbs | 35.2 mpg |
| 2,250 lbs | 31.8 mpg |
| 2,500 lbs | 29.0 mpg |
| 2,750 lbs | 26.8 mpg |
| 3,000 lbs | 24.9 mpg |
| 3,500 lbs | 21.8 mpg |
| 4,000 lbs | 19.4 mpg |
| 4,500 lbs | 17.6 mpg |
| 5,000 lbs | 16.1 mpg |
| 5,500 lbs | 14.8 mpg |
| 6,000 lbs | 13.7 mpg |
| 6,500 lbs | 12.8 mpg |
| 7,000 to 8,500 lbs | 12.1 mpg. |
(C) Vehicle inertia weight class
For purposes of subparagraph (B), the term "vehicle inertia weight class" has the same meaning as when defined in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (
(3) New qualified fuel cell motor vehicle
For purposes of this subsection, the term "new qualified fuel cell motor vehicle" means a motor vehicle—
(A) which is propelled by power derived from 1 or more cells which convert chemical energy directly into electricity by combining oxygen with hydrogen fuel which is stored on board the vehicle in any form and may or may not require reformation prior to use,
(B) which, in the case of a passenger automobile or light truck, has received on or after the date of the enactment of this section a certificate that such vehicle meets or exceeds the Bin 5 Tier II emission level established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle,
(C) the original use of which commences with the taxpayer,
(D) which is acquired for use or lease by the taxpayer and not for resale, and
(E) which is made by a manufacturer.
(c) New advanced lean burn technology motor vehicle credit
(1) In general
For purposes of subsection (a), the new advanced lean burn technology motor vehicle credit determined under this subsection for the taxable year is the credit amount determined under paragraph (2) with respect to a new advanced lean burn technology motor vehicle placed in service by the taxpayer during the taxable year.
(2) Credit amount
(A) Fuel economy
(i) In general
The credit amount determined under this paragraph shall be determined in accordance with the following table:
| In the case of a vehicle which achieves a fuel economy (expressed as a percentage of the 2002 model year city fuel economy) of— | The credit amount is— |
|---|---|
| At least 125 percent but less than 150 percent | $400 |
| At least 150 percent but less than 175 percent | $800 |
| At least 175 percent but less than 200 percent | $1,200 |
| At least 200 percent but less than 225 percent | $1,600 |
| At least 225 percent but less than 250 percent | $2,000 |
| At least 250 percent | $2,400. |
(ii) 2002 model year city fuel economy
For purposes of clause (i), the 2002 model year city fuel economy with respect to a vehicle shall be determined on a gasoline gallon equivalent basis as determined by the Administrator of the Environmental Protection Agency using the tables provided in subsection (b)(2)(B) with respect to such vehicle.
(B) Conservation credit
The amount determined under subparagraph (A) with respect to a new advanced lean burn technology motor vehicle shall be increased by the conservation credit amount determined in accordance with the following table:
| In the case of a vehicle which achieves a lifetime fuel savings (expressed in gallons of gasoline) of— | The conservation credit amount is— |
|---|---|
| At least 1,200 but less than 1,800 | $250 |
| At least 1,800 but less than 2,400 | $500 |
| At least 2,400 but less than 3,000 | $750 |
| At least 3,000 | $1,000. |
(3) New advanced lean burn technology motor vehicle
For purposes of this subsection, the term "new advanced lean burn technology motor vehicle" means a passenger automobile or a light truck—
(A) with an internal combustion engine which—
(i) is designed to operate primarily using more air than is necessary for complete combustion of the fuel,
(ii) incorporates direct injection,
(iii) achieves at least 125 percent of the 2002 model year city fuel economy,
(iv) for 2004 and later model vehicles, has received a certificate that such vehicle meets or exceeds—
(I) in the case of a vehicle having a gross vehicle weight rating of 6,000 pounds or less, the Bin 5 Tier II emission standard established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle, and
(II) in the case of a vehicle having a gross vehicle weight rating of more than 6,000 pounds but not more than 8,500 pounds, the Bin 8 Tier II emission standard which is so established,
(B) the original use of which commences with the taxpayer,
(C) which is acquired for use or lease by the taxpayer and not for resale, and
(D) which is made by a manufacturer.
(4) Lifetime fuel savings
For purposes of this subsection, the term "lifetime fuel savings" means, in the case of any new advanced lean burn technology motor vehicle, an amount equal to the excess (if any) of—
(A) 120,000 divided by the 2002 model year city fuel economy for the vehicle inertia weight class, over
(B) 120,000 divided by the city fuel economy for such vehicle.
(d) New qualified hybrid motor vehicle credit
(1) In general
For purposes of subsection (a), the new qualified hybrid motor vehicle credit determined under this subsection for the taxable year is the credit amount determined under paragraph (2) with respect to a new qualified hybrid motor vehicle placed in service by the taxpayer during the taxable year.
(2) Credit amount
(A) Credit amount for passenger automobiles and light trucks
In the case of a new qualified hybrid motor vehicle which is a passenger automobile or light truck and which has a gross vehicle weight rating of not more than 8,500 pounds, the amount determined under this paragraph is the sum of the amounts determined under clauses (i) and (ii).
(i) Fuel economy
The amount determined under this clause is the amount which would be determined under subsection (c)(2)(A) if such vehicle were a vehicle referred to in such subsection.
(ii) Conservation credit
The amount determined under this clause is the amount which would be determined under subsection (c)(2)(B) if such vehicle were a vehicle referred to in such subsection.
(B) Credit amount for other motor vehicles
(i) In general
In the case of any new qualified hybrid motor vehicle to which subparagraph (A) does not apply, the amount determined under this paragraph is the amount equal to the applicable percentage of the qualified incremental hybrid cost of the vehicle as certified under clause (v).
(ii) Applicable percentage
For purposes of clause (i), the applicable percentage is—
(I) 20 percent if the vehicle achieves an increase in city fuel economy relative to a comparable vehicle of at least 30 percent but less than 40 percent,
(II) 30 percent if the vehicle achieves such an increase of at least 40 percent but less than 50 percent, and
(III) 40 percent if the vehicle achieves such an increase of at least 50 percent.
(iii) Qualified incremental hybrid cost
For purposes of this subparagraph, the qualified incremental hybrid cost of any vehicle is equal to the amount of the excess of the manufacturer's suggested retail price for such vehicle over such price for a comparable vehicle, to the extent such amount does not exceed—
(I) $7,500, if such vehicle has a gross vehicle weight rating of not more than 14,000 pounds,
(II) $15,000, if such vehicle has a gross vehicle weight rating of more than 14,000 pounds but not more than 26,000 pounds, and
(III) $30,000, if such vehicle has a gross vehicle weight rating of more than 26,000 pounds.
(iv) Comparable vehicle
For purposes of this subparagraph, the term "comparable vehicle" means, with respect to any new qualified hybrid motor vehicle, any vehicle which is powered solely by a gasoline or diesel internal combustion engine and which is comparable in weight, size, and use to such vehicle.
(v) Certification
A certification described in clause (i) shall be made by the manufacturer and shall be determined in accordance with guidance prescribed by the Secretary. Such guidance shall specify procedures and methods for calculating fuel economy savings and incremental hybrid costs.
(3) New qualified hybrid motor vehicle
For purposes of this subsection—
(A) In general
The term "new qualified hybrid motor vehicle" means a motor vehicle—
(i) which draws propulsion energy from onboard sources of stored energy which are both—
(I) an internal combustion or heat engine using consumable fuel, and
(II) a rechargeable energy storage system,
(ii) which, in the case of a vehicle to which paragraph (2)(A) applies, has received a certificate of conformity under the Clean Air Act and meets or exceeds the equivalent qualifying California low emission vehicle standard under section 243(e)(2) of the Clean Air Act for that make and model year, and
(I) in the case of a vehicle having a gross vehicle weight rating of 6,000 pounds or less, the Bin 5 Tier II emission standard established in regulations prescribed by the Administrator of the Environmental Protection Agency under section 202(i) of the Clean Air Act for that make and model year vehicle, and
(II) in the case of a vehicle having a gross vehicle weight rating of more than 6,000 pounds but not more than 8,500 pounds, the Bin 8 Tier II emission standard which is so established,
(iii) which has a maximum available power of at least—
(I) 4 percent in the case of a vehicle to which paragraph (2)(A) applies,
(II) 10 percent in the case of a vehicle which has a gross vehicle weight rating of more than 8,500 pounds and not more than 14,000 pounds, and
(III) 15 percent in the case of a vehicle in excess of 14,000 pounds,
(iv) which, in the case of a vehicle to which paragraph (2)(B) applies, has an internal combustion or heat engine which has received a certificate of conformity under the Clean Air Act as meeting the emission standards set in the regulations prescribed by the Administrator of the Environmental Protection Agency for 2004 through 2007 model year diesel heavy duty engines or ottocycle heavy duty engines, as applicable,
(v) the original use of which commences with the taxpayer,
(vi) which is acquired for use or lease by the taxpayer and not for resale, and
(vii) which is made by a manufacturer.
Such term shall not include any vehicle which is not a passenger automobile or light truck if such vehicle has a gross vehicle weight rating of less than 8,500 pounds.
(B) Consumable fuel
For purposes of subparagraph (A)(i)(I), the term "consumable fuel" means any solid, liquid, or gaseous matter which releases energy when consumed by an auxiliary power unit.
(C) Maximum available power
(i) Certain passenger automobiles and light trucks
In the case of a vehicle to which paragraph (2)(A) applies, the term "maximum available power" means the maximum power available from the rechargeable energy storage system, during a standard 10 second pulse power or equivalent test, divided by such maximum power and the SAE net power of the heat engine.
(ii) Other motor vehicles
In the case of a vehicle to which paragraph (2)(B) applies, the term "maximum available power" means the maximum power available from the rechargeable energy storage system, during a standard 10 second pulse power or equivalent test, divided by the vehicle's total traction power. For purposes of the preceding sentence, the term "total traction power" means the sum of the peak power from the rechargeable energy storage system and the heat engine peak power of the vehicle, except that if such storage system is the sole means by which the vehicle can be driven, the total traction power is the peak power of such storage system.
(D) Exclusion of plug-in vehicles
Any vehicle with respect to which a credit is allowable under section 30D (determined without regard to subsection (c) thereof) shall not be taken into account under this section.
(e) New qualified alternative fuel motor vehicle credit
(1) Allowance of credit
Except as provided in paragraph (5), the new qualified alternative fuel motor vehicle credit determined under this subsection is an amount equal to the applicable percentage of the incremental cost of any new qualified alternative fuel motor vehicle placed in service by the taxpayer during the taxable year.
(2) Applicable percentage
For purposes of paragraph (1), the applicable percentage with respect to any new qualified alternative fuel motor vehicle is—
(A) 50 percent, plus
(B) 30 percent, if such vehicle—
(i) has received a certificate of conformity under the Clean Air Act and meets or exceeds the most stringent standard available for certification under the Clean Air Act for that make and model year vehicle (other than a zero emission standard), or
(ii) has received an order certifying the vehicle as meeting the same requirements as vehicles which may be sold or leased in California and meets or exceeds the most stringent standard available for certification under the State laws of California (enacted in accordance with a waiver granted under section 209(b) of the Clean Air Act) for that make and model year vehicle (other than a zero emission standard).
For purposes of the preceding sentence, in the case of any new qualified alternative fuel motor vehicle which weighs more than 14,000 pounds gross vehicle weight rating, the most stringent standard available shall be such standard available for certification on the date of the enactment of the Energy Tax Incentives Act of 2005.
(3) Incremental cost
For purposes of this subsection, the incremental cost of any new qualified alternative fuel motor vehicle is equal to the amount of the excess of the manufacturer's suggested retail price for such vehicle over such price for a gasoline or diesel fuel motor vehicle of the same model, to the extent such amount does not exceed—
(A) $5,000, if such vehicle has a gross vehicle weight rating of not more than 8,500 pounds,
(B) $10,000, if such vehicle has a gross vehicle weight rating of more than 8,500 pounds but not more than 14,000 pounds,
(C) $25,000, if such vehicle has a gross vehicle weight rating of more than 14,000 pounds but not more than 26,000 pounds, and
(D) $40,000, if such vehicle has a gross vehicle weight rating of more than 26,000 pounds.
(4) New qualified alternative fuel motor vehicle
For purposes of this subsection—
(A) In general
The term "new qualified alternative fuel motor vehicle" means any motor vehicle—
(i) which is only capable of operating on an alternative fuel,
(ii) the original use of which commences with the taxpayer,
(iii) which is acquired by the taxpayer for use or lease, but not for resale, and
(iv) which is made by a manufacturer.
(B) Alternative fuel
The term "alternative fuel" means compressed natural gas, liquefied natural gas, liquefied petroleum gas, hydrogen, and any liquid at least 85 percent of the volume of which consists of methanol.
(5) Credit for mixed-fuel vehicles
(A) In general
In the case of a mixed-fuel vehicle placed in service by the taxpayer during the taxable year, the credit determined under this subsection is an amount equal to—
(i) in the case of a 75/25 mixed-fuel vehicle, 70 percent of the credit which would have been allowed under this subsection if such vehicle was a qualified alternative fuel motor vehicle, and
(ii) in the case of a 90/10 mixed-fuel vehicle, 90 percent of the credit which would have been allowed under this subsection if such vehicle was a qualified alternative fuel motor vehicle.
(B) Mixed-fuel vehicle
For purposes of this subsection, the term "mixed-fuel vehicle" means any motor vehicle described in subparagraph (C) or (D) of paragraph (3), which—
(i) is certified by the manufacturer as being able to perform efficiently in normal operation on a combination of an alternative fuel and a petroleum-based fuel,
(ii) either—
(I) has received a certificate of conformity under the Clean Air Act, or
(II) has received an order certifying the vehicle as meeting the same requirements as vehicles which may be sold or leased in California and meets or exceeds the low emission vehicle standard under section 88.105–94 of title 40, Code of Federal Regulations, for that make and model year vehicle,
(iii) the original use of which commences with the taxpayer,
(iv) which is acquired by the taxpayer for use or lease, but not for resale, and
(v) which is made by a manufacturer.
(C) 75/25 mixed-fuel vehicle
For purposes of this subsection, the term "75/25 mixed-fuel vehicle" means a mixed-fuel vehicle which operates using at least 75 percent alternative fuel and not more than 25 percent petroleum-based fuel.
(D) 90/10 mixed-fuel vehicle
For purposes of this subsection, the term "90/10 mixed-fuel vehicle" means a mixed-fuel vehicle which operates using at least 90 percent alternative fuel and not more than 10 percent petroleum-based fuel.
(f) Limitation on number of new qualified hybrid and advanced lean-burn technology vehicles eligible for credit
(1) In general
In the case of a qualified vehicle sold during the phaseout period, only the applicable percentage of the credit otherwise allowable under subsection (c) or (d) shall be allowed.
(2) Phaseout period
For purposes of this subsection, the phaseout period is the period beginning with the second calendar quarter following the calendar quarter which includes the first date on which the number of qualified vehicles manufactured by the manufacturer of the vehicle referred to in paragraph (1) sold for use in the United States after December 31, 2005, is at least 60,000.
(3) Applicable percentage
For purposes of paragraph (1), the applicable percentage is—
(A) 50 percent for the first 2 calendar quarters of the phaseout period,
(B) 25 percent for the 3d and 4th calendar quarters of the phaseout period, and
(C) 0 percent for each calendar quarter thereafter.
(4) Controlled groups
(A) In general
For purposes of this subsection, all persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as a single manufacturer.
(B) Inclusion of foreign corporations
For purposes of subparagraph (A), in applying subsections (a) and (b) of section 52 to this section, section 1563 shall be applied without regard to subsection (b)(2)(C) thereof.
(5) Qualified vehicle
For purposes of this subsection, the term "qualified vehicle" means any new qualified hybrid motor vehicle (described in subsection (d)(2)(A)) and any new advanced lean burn technology motor vehicle.
(g) Application with other credits
(1) Business credit treated as part of general business credit
So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).
(2) Personal credit
For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.
(h) Other definitions and special rules
For purposes of this section—
(1) Motor vehicle
The term "motor vehicle" means any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels.
(2) City fuel economy
The city fuel economy with respect to any vehicle shall be measured in a manner which is substantially similar to the manner city fuel economy is measured in accordance with procedures under part 600 of subchapter Q of chapter I of title 40, Code of Federal Regulations, as in effect on the date of the enactment of this section.
(3) Other terms
The terms "automobile", "passenger automobile", "medium duty passenger vehicle", "light truck", and "manufacturer" have the meanings given such terms in regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (
(4) Reduction in basis
For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to subsection (g)).
(5) No double benefit
The amount of any deduction or other credit allowable under this chapter—
(A) for any incremental cost taken into account in computing the amount of the credit determined under subsection (e) shall be reduced by the amount of such credit attributable to such cost, and
(B) with respect to a vehicle described under subsection (b) or (c), shall be reduced by the amount of credit allowed under subsection (a) for such vehicle for the taxable year (determined without regard to subsection (g)).
(6) Property used by tax-exempt entity
In the case of a vehicle whose use is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such vehicle to the person or entity using such vehicle shall be treated as the taxpayer that placed such vehicle in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such vehicle (determined without regard to subsection (g)). For purposes of subsection (g), property to which this paragraph applies shall be treated as of a character subject to an allowance for depreciation.
(7) Property used outside United States, etc., not qualified
No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1) or with respect to the portion of the cost of any property taken into account under section 179.
(8) Recapture
The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit (including recapture in the case of a lease period of less than the economic life of a vehicle).
(9) Election to not take credit
No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.
(10) Interaction with air quality and motor vehicle safety standards
Unless otherwise provided in this section, a motor vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with—
(A) the applicable provisions of the Clean Air Act for the applicable make and model year of the vehicle (or applicable air quality provisions of State law in the case of a State which has adopted such provision under a waiver under section 209(b) of the Clean Air Act), and
(B) the motor vehicle safety provisions of
[(i) Repealed. Pub. L. 117–169, title I, §13401(i)(2)(B), Aug. 16, 2022, 136 Stat. 1961 ]
(j) Regulations
(1) In general
Except as provided in paragraph (2), the Secretary shall promulgate such regulations as necessary to carry out the provisions of this section.
(2) Coordination in prescription of certain regulations
The Secretary of the Treasury, in coordination with the Secretary of Transportation and the Administrator of the Environmental Protection Agency, shall prescribe such regulations as necessary to determine whether a motor vehicle meets the requirements to be eligible for a credit under this section.
(k) Termination
This section shall not apply to any property purchased after—
(1) in the case of a new qualified fuel cell motor vehicle (as described in subsection (b)), December 31, 2021,
(2) in the case of a new advanced lean burn technology motor vehicle (as described in subsection (c)) or a new qualified hybrid motor vehicle (as described in subsection (d)(2)(A)), December 31, 2010,
(3) in the case of a new qualified hybrid motor vehicle (as described in subsection (d)(2)(B)), December 31, 2009, and
(4) in the case of a new qualified alternative fuel vehicle (as described in subsection (e)), December 31, 2010.
(Added
Editorial Notes
References in Text
The Clean Air Act, referred to in text, is act July 14, 1955, ch. 360,
The date of the enactment of this section, referred to in subsecs. (b)(3)(B) and (h)(2), is the date of enactment of
The date of the enactment of the Energy Tax Incentives Act of 2005, referred to in subsec. (e)(2), is the date of enactment of title XIII of
Amendments
2022—Subsec. (h)(8).
Subsec. (i).
2020—Subsec. (k)(1).
2019—Subsec. (k)(1).
2018—Subsec. (k)(1).
2015—Subsec. (k)(1).
2014—Subsec. (h)(5)(B).
Subsec. (h)(8).
2013—Subsec. (g)(2).
2010—Subsec. (g)(2)(B)(ii).
2009—Subsec. (a)(5).
Subsec. (d)(3)(D).
Subsec. (g)(2).
"(A) the regular tax liability (as defined in section 26(b)) reduced by the sum of the credits allowable under subpart A and sections 27 and 30, over
"(B) the tentative minimum tax for the taxable year."
Subsec. (h)(1).
Subsec. (h)(8).
Subsecs. (i) to (k).
2008—Subsec. (d)(3)(D).
2005—Subsec. (g)(2)(A).
Subsec. (h)(6).
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment
Amendment by
Effective Date of 2020 Amendment
Effective Date of 2019 Amendment
Effective Date of 2018 Amendment
Effective Date of 2015 Amendment
Effective Date of 2014 Amendment
Effective Date of 2013 Amendment
Amendment by
Effective and Termination Dates of 2010 Amendment
Amendment by
Amendment by
Effective Date of 2009 Amendment
Amendment by section 1142(b)(2) of
Amendment by section 1144(a) of
Effective Date of 2008 Amendment
Amendment by
Effective Date of 2005 Amendment
Amendment by section 402(j) of
Effective Date
§30C. Alternative fuel vehicle refueling property credit
(a) Credit allowed
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent (6 percent in the case of property of a character subject to depreciation) of the cost of any qualified alternative fuel vehicle refueling property placed in service by the taxpayer during the taxable year.
(b) Limitation
The credit allowed under subsection (a) with respect to any single item of qualified alternative fuel vehicle refueling property placed in service by the taxpayer during the taxable year shall not exceed—
(1) $100,000 in the case of any such item of property of a character subject to an allowance for depreciation, and
(2) $1,000 in any other case.
(c) Qualified alternative fuel vehicle refueling property
For purposes of this section—
(1) In general
The term "qualified alternative fuel vehicle refueling property" has the same meaning as the term "qualified clean-fuel vehicle refueling property" would have under section 179A if—
(A) paragraph (1) of section 179A(d) did not apply to property installed on property which is used as the principal residence (within the meaning of section 121) of the taxpayer, and
(B) only the following were treated as clean-burning fuels for purposes of section 179A(d):
(i) Any fuel at least 85 percent of the volume of which consists of one or more of the following: ethanol, natural gas, compressed natural gas, liquified natural gas, liquefied petroleum gas, or hydrogen.
(ii) Any mixture—
(I) which consists of two or more of the following: biodiesel (as defined in section 40A(d)(1)), diesel fuel (as defined in section 4083(a)(3)), or kerosene, and
(II) at least 20 percent of the volume of which consists of biodiesel (as so defined) determined without regard to any kerosene in such mixture.
(iii) Electricity.
(2) Bidirectional charging equipment
Property shall not fail to be treated as qualified alternative fuel vehicle refueling property solely because such property—
(A) is capable of charging the battery of a motor vehicle propelled by electricity, and
(B) allows discharging electricity from such battery to an electric load external to such motor vehicle.
(3) Property required to be located in eligible census tracts
(A) In general
Property shall not be treated as qualified alternative fuel vehicle refueling property unless such property is placed in service in an eligible census tract.
(B) Eligible census tract
(i) In general
For purposes of this paragraph, the term "eligible census tract" means any population census tract which—
(I) is described in section 45D(e), or
(II) is not an urban area.
(ii) Urban area
For purposes of clause (i)(II), the term "urban area" means a census tract (as defined by the Bureau of the Census) which, according to the most recent decennial census, has been designated as an urban area by the Secretary of Commerce.
(d) Application with other credits
(1) Business credit treated as part of general business credit
So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).
(2) Personal credit
The credit allowed under subsection (a) (after the application of paragraph (1)) for any taxable year shall not exceed the excess (if any) of—
(A) the regular tax liability (as defined in section 26(b)) reduced by the sum of the credits allowable under subpart A and section 27, over
(B) the tentative minimum tax for the taxable year.
(e) Special rules
For purposes of this section—
(1) Reduction in basis
For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to subsection (d)).
(2) Property used by tax-exempt entity
In the case of any qualified alternative fuel vehicle refueling property the use of which is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such property to the person or entity using such property shall be treated as the taxpayer that placed such property in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such property (determined without regard to subsection (d)). For purposes of subsection (d), property to which this paragraph applies shall be treated as of a character subject to an allowance for depreciation.
(3) Property used outside United States not qualified
No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1) or with respect to the portion of the cost of any property taken into account under section 179.
(4) Election not to take credit
No credit shall be allowed under subsection (a) for any property if the taxpayer elects not to have this section apply to such property.
(5) Recapture rules
Rules similar to the rules of section 179A(e)(4) shall apply.
(6) Reference
For purposes of this section, any reference to section 179A shall be treated as a reference to such section as in effect immediately before its repeal.
(f) Special rule for electric charging stations for certain vehicles with 2 or 3 wheels
For purposes of this section—
(1) In general
The term "qualified alternative fuel vehicle refueling property" includes any property described in subsection (c) for the recharging of a motor vehicle described in paragraph (2), but only if such property—
(A) meets the requirements of subsection (a)(2),1 and
(B) is of a character subject to depreciation.
(2) Motor vehicle
A motor vehicle is described in this paragraph if the motor vehicle—
(A) is manufactured primarily for use on public streets, roads, or highways (not including a vehicle operated exclusively on a rail or rails),
(B) has 2 or 3 wheels, and
(C) is propelled by electricity.
(g) Wage and apprenticeship requirements
(1) Increased credit amount
(A) In general
In the case of any qualified alternative fuel vehicle refueling project which satisfies the requirements of subparagraph (C), the amount of the credit determined under subsection (a) for any qualified alternative fuel vehicle refueling property of a character subject to an allowance for depreciation which is part of such project shall be equal to such amount (determined without regard to this sentence) multiplied by 5.
(B) Qualified alternative fuel vehicle refueling project
For purposes of this subsection, the term "qualified alternative fuel vehicle refueling project" means a project consisting of one or more properties that are part of a single project.
(C) Project requirements
A project meets the requirements of this subparagraph if it is one of the following:
(i) A project the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance with respect to the requirements of paragraphs (2)(A) and (3).
(ii) A project which satisfies the requirements of paragraphs (2)(A) and (3).
(2) Prevailing wage requirements
(A) In general
The requirements described in this subparagraph with respect to any qualified alternative fuel vehicle refueling project are that the taxpayer shall ensure that any laborers and mechanics employed by the taxpayer or any contractor or subcontractor in the construction of any qualified alternative fuel vehicle refueling property which is part of such project shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality in which such project is located as most recently determined by the Secretary of Labor, in accordance with subchapter IV of
(B) Correction and penalty related to failure to satisfy wage requirements
Rules similar to the rules of section 45(b)(7)(B) shall apply.
(3) Apprenticeship requirements
Rules similar to the rules of section 45(b)(8) shall apply.
(4) Regulations and guidance
The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of administering the requirements of this subsection.
(h) Regulations
The Secretary shall prescribe such regulations as necessary to carry out the provisions of this section.
(i) Termination
This section shall not apply to any property placed in service after December 31, 2032.
(Added
Amendment of Subsection (c)(1)(B)
(iv) Any transportation fuel (as defined in section 45Z(d)(5)).
See 2022 Amendment note below.
Editorial Notes
References in Text
Section 179A as in effect immediately before its repeal, referred to in subsec. (e)(6), means
Amendments
2022—Subsec. (a).
Subsec. (b).
Subsec. (b)(1).
Subsec. (c).
Subsec. (c)(1)(B)(iv).
Subsec. (c)(3).
Subsec. (f).
Subsec. (g).
Subsecs. (h), (i).
2020—Subsec. (g).
2019—Subsec. (g).
2018—Subsec. (e)(6), (7).
Subsec. (g).
2015—Subsec. (g).
2014—Subsec. (e)(1).
Subsec. (e)(7).
Subsec. (g).
"(1) in the case of property relating to hydrogen, after December 31, 2014, and
"(2) in the case of any other property, after December 31, 2013."
2013—Subsec. (g)(2).
2010—Subsec. (g)(2).
2009—Subsec. (d)(2)(A).
Subsec. (e)(6).
2008—Subsec. (c)(2)(C).
Subsec. (g)(2).
2007—Subsec. (b).
Subsec. (c).
"(1)
"(A) at least 85 percent of the volume of which consists of one or more of the following: ethanol, natural gas, compressed natural gas, liquefied natural gas, liquefied petroleum gas, or hydrogen, or
"(B) any mixture of biodiesel (as defined in section 40A(d)(1)) and diesel fuel (as defined in section 4083(a)(3)), determined without regard to any use of kerosene and containing at least 20 percent biodiesel.
"(2)
2005—Subsec. (d)(2)(A).
Subsec. (e)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment
"(1)
"(2)
Amendment by section 13704(b)(2) of
Effective Date of 2020 Amendment
Effective Date of 2019 Amendment
Effective Date of 2018 Amendment
Effective Date of 2015 Amendment
Effective Date of 2014 Amendment
Amendment by section 218(b) of
Amendment by section 221(a)(34)(B) of
Effective Date of 2013 Amendment
Effective Date of 2010 Amendment
Effective Date of 2009 Amendment
Amendment by section 1142(b)(3) of
Amendment by section 1144(b)(2) of
Effective Date of 2008 Amendment
Effective Date of 2007 Amendment
"(1)
"(2)
"(3)
Effective Date of 2005 Amendment
Amendment by section 402(k) of
Effective Date
Savings Provision
For provisions that nothing in amendment by
1 So in original. There is no subsec. (a)(2) in this section.
§30D. Clean vehicle credit
(a) Allowance of credit
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the credit amounts determined under subsection (b) with respect to each new clean vehicle placed in service by the taxpayer during the taxable year.
(b) Per vehicle dollar limitation
(1) In general
The amount determined under this subsection with respect to any new clean vehicle is the sum of the amounts determined under paragraphs (2) and (3) with respect to such vehicle.
(2) Base amount
The amount determined under this paragraph is $2,500.
(3) Battery capacity
In the case of a vehicle which draws propulsion energy from a battery with not less than 5 kilowatt hours of capacity, the amount determined under this paragraph is $417, plus $417 for each kilowatt hour of capacity in excess of 5 kilowatt hours. The amount determined under this paragraph shall not exceed $5,000.
(c) Application with other credits
(1) Business credit treated as part of general business credit
So much of the credit which would be allowed under subsection (a) for any taxable year (determined without regard to this subsection) that is attributable to property of a character subject to an allowance for depreciation shall be treated as a credit listed in section 38(b) for such taxable year (and not allowed under subsection (a)).
(2) Personal credit
For purposes of this title, the credit allowed under subsection (a) for any taxable year (determined after application of paragraph (1)) shall be treated as a credit allowable under subpart A for such taxable year.
(d) New clean vehicle
For purposes of this section—
(1) In general
The term "new clean vehicle" means a motor vehicle—
(A) the original use of which commences with the taxpayer,
(B) which is acquired for use or lease by the taxpayer and not for resale,
(C) which is made by a qualified manufacturer,
(D) which is treated as a motor vehicle for purposes of title II of the Clean Air Act,
(E) which has a gross vehicle weight rating of less than 14,000 pounds,
(F) which is propelled to a significant extent by an electric motor which draws electricity from a battery which—
(i) has a capacity of not less than 7 kilowatt hours, and
(ii) is capable of being recharged from an external source of electricity,
(G) the final assembly of which occurs within North America, and
(H) for which the person who sells any vehicle to the taxpayer furnishes a report to the taxpayer and to the Secretary, at such time and in such manner as the Secretary shall provide, containing—
(i) the name and taxpayer identification number of the taxpayer,
(ii) the vehicle identification number of the vehicle, unless, in accordance with any applicable rules promulgated by the Secretary of Transportation, the vehicle is not assigned such a number,
(iii) the battery capacity of the vehicle,
(iv) verification that original use of the vehicle commences with the taxpayer, and
(v) the maximum credit under this section allowable to the taxpayer with respect to the vehicle.
(2) Motor vehicle
The term "motor vehicle" means any vehicle which is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails) and which has at least 4 wheels.
(3) Qualified manufacturer
The term "qualified manufacturer" means any manufacturer (within the meaning of the regulations prescribed by the Administrator of the Environmental Protection Agency for purposes of the administration of title II of the Clean Air Act (
(4) Battery capacity
The term "capacity" means, with respect to any battery, the quantity of electricity which the battery is capable of storing, expressed in kilowatt hours, as measured from a 100 percent state of charge to a 0 percent state of charge.
(5) Final assembly
For purposes of paragraph (1)(G), the term "final assembly" means the process by which a manufacturer produces a new clean vehicle at, or through the use of, a plant, factory, or other place from which the vehicle is delivered to a dealer or importer with all component parts necessary for the mechanical operation of the vehicle included with the vehicle, whether or not the component parts are permanently installed in or on the vehicle.
(6) New qualified fuel cell motor vehicle
For purposes of this section, the term "new clean vehicle" shall include any new qualified fuel cell motor vehicle (as defined in section 30B(b)(3)) which meets the requirements under subparagraphs (G) and (H) of paragraph (1).
[(e) Repealed. Pub. L. 117–169, title I, §13401(d), Aug. 16, 2022, 136 Stat. 1956 ]
(f) Special rules
(1) Basis reduction
For purposes of this subtitle, the basis of any property for which a credit is allowable under subsection (a) shall be reduced by the amount of such credit so allowed (determined without regard to subsection (c)).
(2) No double benefit
The amount of any deduction or other credit allowable under this chapter for a vehicle for which a credit is allowable under subsection (a) shall be reduced by the amount of credit allowed under such subsection for such vehicle (determined without regard to subsection (c)).
(3) Property used by tax-exempt entity
In the case of a vehicle the use of which is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such vehicle to the person or entity using such vehicle shall be treated as the taxpayer that placed such vehicle in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such vehicle (determined without regard to subsection (c)). For purposes of subsection (c), property to which this paragraph applies shall be treated as of a character subject to an allowance for depreciation.
(4) Property used outside United States not qualified
No credit shall be allowable under subsection (a) with respect to any property referred to in section 50(b)(1).
(5) Recapture
The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any property which ceases to be property eligible for such credit.
(6) Election not to take credit
No credit shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.
(7) Interaction with air quality and motor vehicle safety standards
A vehicle shall not be considered eligible for a credit under this section unless such vehicle is in compliance with—
(A) the applicable provisions of the Clean Air Act for the applicable make and model year of the vehicle (or applicable air quality provisions of State law in the case of a State which has adopted such provision under a waiver under section 209(b) of the Clean Air Act), and
(B) the motor vehicle safety provisions of
(8) One credit per vehicle
In the case of any vehicle, the credit described in subsection (a) shall only be allowed once with respect to such vehicle, as determined based upon the vehicle identification number of such vehicle.
(9) VIN requirement
No credit shall be allowed under this section with respect to any vehicle unless the taxpayer includes the vehicle identification number of such vehicle on the return of tax for the taxable year.
(10) Limitation based on modified adjusted gross income
(A) In general
No credit shall be allowed under subsection (a) for any taxable year if—
(i) the lesser of—
(I) the modified adjusted gross income of the taxpayer for such taxable year, or
(II) the modified adjusted gross income of the taxpayer for the preceding taxable year, exceeds
(ii) the threshold amount.
(B) Threshold amount
For purposes of subparagraph (A)(ii), the threshold amount shall be—
(i) in the case of a joint return or a surviving spouse (as defined in section 2(a)), $300,000,
(ii) in the case of a head of household (as defined in section 2(b)), $225,000, and
(iii) in the case of a taxpayer not described in clause (i) or (ii), $150,000.
(C) Modified adjusted gross income
For purposes of this paragraph, the term "modified adjusted gross income" means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.
(11) Manufacturer's suggested retail price limitation
(A) In general
No credit shall be allowed under subsection (a) for a vehicle with a manufacturer's suggested retail price in excess of the applicable limitation.
(B) Applicable limitation
For purposes of subparagraph (A), the applicable limitation for each vehicle classification is as follows:
(i) Vans
In the case of a van, $80,000.
(ii) Sport utility vehicles
In the case of a sport utility vehicle, $80,000.
(iii) Pickup trucks
In the case of a pickup truck, $80,000.
(iv) Other
In the case of any other vehicle, $55,000.
(C) Regulations and guidance
For purposes of this paragraph, the Secretary shall prescribe such regulations or other guidance as the Secretary determines necessary for determining vehicle classifications using criteria similar to that employed by the Environmental Protection Agency and the Department of the Energy to determine size and class of vehicles.
(g) Credit allowed for 2- and 3-wheeled plug-in electric vehicles
(1) In general
In the case of a qualified 2- or 3-wheeled plug-in electric vehicle—
(A) there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the applicable amount with respect to each such qualified 2- or 3-wheeled plug-in electric vehicle placed in service by the taxpayer during the taxable year, and
(B) the amount of the credit allowed under subparagraph (A) shall be treated as a credit allowed under subsection (a).
(2) Applicable amount
For purposes of paragraph (1), the applicable amount is an amount equal to the lesser of—
(A) 10 percent of the cost of the qualified 2- or 3-wheeled plug-in electric vehicle, or
(B) $2,500.
(3) Qualified 2- or 3-wheeled plug-in electric vehicle
The term "qualified 2- or 3-wheeled plug-in electric vehicle" means any vehicle which—
(A) has 2 or 3 wheels,
(B) meets the requirements of subparagraphs (A), (B), (C), (E), and (F) of subsection (d)(1) (determined by substituting "2.5 kilowatt hours" for "4 kilowatt hours" in subparagraph (F)(i)),
(C) is manufactured primarily for use on public streets, roads, and highways,
(D) is capable of achieving a speed of 45 miles per hour or greater, and
(E) is acquired—
(i) after December 31, 2011, and before January 1, 2014, or
(ii) in the case of a vehicle that has 2 wheels, after December 31, 2014, and before January 1, 2022.
(h) Termination
No credit shall be allowed under this section with respect to any vehicle placed in service after December 31, 2032.
(Added
Amendment of Section
(1) in subsection (b), by striking paragraphs (2) and (3) and inserting the following:
"(2) Critical minerals
"In the case of a vehicle with respect to which the requirement described in subsection (e)(1)(A) is satisfied, the amount determined under this paragraph is $3,750.
"(3) Battery components
"In the case of a vehicle with respect to which the requirement described in subsection (e)(2)(A) is satisfied, the amount determined under this paragraph is $3,750.";
(2) in subsection (d), by adding at the end the following:
"(7) Excluded entities
"For purposes of this section, the term 'new clean vehicle' shall not include—
"(A) any vehicle placed in service after December 31, 2024, with respect to which any of the applicable critical minerals contained in the battery of such vehicle (as described in subsection (e)(1)(A)) were extracted, processed, or recycled by a foreign entity of concern (as defined in section 40207(a)(5) of the Infrastructure Investment and Jobs Act (
"(B) any vehicle placed in service after December 31, 2023, with respect to which any of the components contained in the battery of such vehicle (as described in subsection (e)(2)(A)) were manufactured or assembled by a foreign entity of concern (as so defined)."; and
(3) by inserting after subsection (d) the following:
"(e) Critical mineral and battery component requirements
"(1) Critical minerals requirement
"(A) In general
"The requirement described in this subparagraph with respect to a vehicle is that, with respect to the battery from which the electric motor of such vehicle draws electricity, the percentage of the value of the applicable critical minerals (as defined in section 45X(c)(6)) contained in such battery that were—
"(i) extracted or processed—
"(I) in the United States, or
"(II) in any country with which the United States has a free trade agreement in effect, or
"(ii) recycled in North America,
is equal to or greater than the applicable percentage (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary).
"(B) Applicable percentage
"For purposes of subparagraph (A), the applicable percentage shall be—
"(i) in the case of a vehicle placed in service after the date on which the proposed guidance described in paragraph (3)(B) is issued by the Secretary and before January 1, 2024, 40 percent,
"(ii) in the case of a vehicle placed in service during calendar year 2024, 50 percent,
"(iii) in the case of a vehicle placed in service during calendar year 2025, 60 percent,
"(iv) in the case of a vehicle placed in service during calendar year 2026, 70 percent, and
"(v) in the case of a vehicle placed in service after December 31, 2026, 80 percent.
"(2) Battery components
"(A) In general
"The requirement described in this subparagraph with respect to a vehicle is that, with respect to the battery from which the electric motor of such vehicle draws electricity, the percentage of the value of the components contained in such battery that were manufactured or assembled in North America is equal to or greater than the applicable percentage (as certified by the qualified manufacturer, in such form or manner as prescribed by the Secretary).
"(B) Applicable percentage
"For purposes of subparagraph (A), the applicable percentage shall be—
"(i) in the case of a vehicle placed in service after the date on which the proposed guidance described in paragraph (3)(B) is issued by the Secretary and before January 1, 2024, 50 percent,
"(ii) in the case of a vehicle placed in service during calendar year 2024 or 2025, 60 percent,
"(iii) in the case of a vehicle placed in service during calendar year 2026, 70 percent,
"(iv) in the case of a vehicle placed in service during calendar year 2027, 80 percent,
"(v) in the case of a vehicle placed in service during calendar year 2028, 90 percent,
"(vi) in the case of a vehicle placed in service after December 31, 2028, 100 percent.
"(3) Regulations and guidance
"(A) In general
"The Secretary shall issue such regulations or other guidance as the Secretary determines necessary to carry out the purposes of this subsection, including regulations or other guidance which provides for requirements for recordkeeping or information reporting for purposes of administering the requirements of this subsection.
"(B) Deadline for proposed guidance
"Not later than December 31, 2022, the Secretary shall issue proposed guidance with respect to the requirements under this subsection."
See 2022 Amendment notes below.
(1) in subsection (d)(1)(H), by striking "and" at the end of clause (iv), striking the period at the end of clause (v) and inserting ", and", and adding at the end the following:
"(vi) in the case of a taxpayer who makes an election under subsection (g)(1), any amount described in subsection (g)(2)(C) which has been provided to such taxpayer.";
(2) in subsection (f):
(A) by striking paragraph (3); and
(B) in paragraph (8), by inserting ", including any vehicle with respect to which the taxpayer elects the application of subsection (g)" before the period at the end; and
(3) by striking subsection (g) and inserting the following:
"(g) Transfer of credit
"(1) In general
"Subject to such regulations or other guidance as the Secretary determines necessary, if the taxpayer who acquires a new clean vehicle elects the application of this subsection with respect to such vehicle, the credit which would (but for this subsection) be allowed to such taxpayer with respect to such vehicle shall be allowed to the eligible entity specified in such election (and not to such taxpayer).
"(2) Eligible entity
"For purposes of this subsection, the term 'eligible entity' means, with respect to the vehicle for which the credit is allowed under subsection (a), the dealer which sold such vehicle to the taxpayer and has—
"(A) subject to paragraph (4), registered with the Secretary for purposes of this paragraph, at such time, and in such form and manner, as the Secretary may prescribe,
"(B) prior to the election described in paragraph (1) and not later than at the time of such sale, disclosed to the taxpayer purchasing such vehicle—
"(i) the manufacturer's suggested retail price,
"(ii) the value of the credit allowed and any other incentive available for the purchase of such vehicle, and
"(iii) the amount provided by the dealer to such taxpayer as a condition of the election described in paragraph (1),
"(C) not later than at the time of such sale, made payment to such taxpayer (whether in cash or in the form of a partial payment or down payment for the purchase of such vehicle) in an amount equal to the credit otherwise allowable to such taxpayer, and
"(D) with respect to any incentive otherwise available for the purchase of a vehicle for which a credit is allowed under this section, including any incentive in the form of a rebate or discount provided by the dealer or manufacturer, ensured that—
"(i) the availability or use of such incentive shall not limit the ability of a taxpayer to make an election described in paragraph (1), and
"(ii) such election shall not limit the value or use of such incentive.
"(3) Timing
"An election described in paragraph (1) shall be made by the taxpayer not later than the date on which the vehicle for which the credit is allowed under subsection (a) is purchased.
"(4) Revocation of registration
"Upon determination by the Secretary that a dealer has failed to comply with the requirements described in paragraph (2), the Secretary may revoke the registration (as described in subparagraph (A) of such paragraph) of such dealer.
"(5) Tax treatment of payments
"With respect to any payment described in paragraph (2)(C), such payment—
"(A) shall not be includible in the gross income of the taxpayer, and
"(B) with respect to the dealer, shall not be deductible under this title.
"(6) Application of certain other requirements
"In the case of any election under paragraph (1) with respect to any vehicle—
"(A) the requirements of paragraphs (1) and (2) of subsection (f) shall apply to the taxpayer who acquired the vehicle in the same manner as if the credit determined under this section with respect to such vehicle were allowed to such taxpayer,
"(B) paragraph (6) of such subsection shall not apply, and
"(C) the requirement of paragraph (9) of such subsection (f) shall be treated as satisfied if the eligible entity provides the vehicle identification number of such vehicle to the Secretary in such manner as the Secretary may provide.
"(7) Advance payment to registered dealers
"(A) In general
"The Secretary shall establish a program to make advance payments to any eligible entity in an amount equal to the cumulative amount of the credits allowed under subsection (a) with respect to any vehicles sold by such entity for which an election described in paragraph (1) has been made.
"(B) Excessive payments
"Rules similar to the rules of section 6417(d)(6) shall apply for purposes of this paragraph.
"(C) Treatment of advance payments
"For purposes of
"(8) Dealer
"For purposes of this subsection, the term 'dealer' means a person licensed by a State, the District of Columbia, the Commonwealth of Puerto Rico, any other territory or possession of the United States, an Indian tribal government, or any Alaska Native Corporation (as defined in section 3 of the Alaska Native Claims Settlement Act (
"(9) Indian tribal government
"For purposes of this subsection, the term 'Indian tribal government' means the recognized governing body of any Indian or Alaska Native tribe, band, nation, pueblo, village, community, component band, or component reservation, individually identified (including parenthetically) in the list published most recently as of the date of enactment of this subsection pursuant to section 104 of the Federally Recognized Indian Tribe List Act of 1994 (
"(10) Recapture
"In the case of any taxpayer who has made an election described in paragraph (1) with respect to a new clean vehicle and received a payment described in paragraph (2)(C) from an eligible entity, if the credit under subsection (a) would otherwise (but for this subsection) not be allowable to such taxpayer pursuant to the application of subsection (f)(10), the tax imposed on such taxpayer under this chapter for the taxable year in which such vehicle was placed in service shall be increased by the amount of the payment received by such taxpayer."
See 2022 Amendment notes below.
Editorial Notes
References in Text
The Clean Air Act, referred to in subsecs. (d)(1)(D), (3), (f)(7)(A), is act July 14, 1955, ch. 360,
Amendments
2022—
Subsec. (a).
Subsec. (b)(1).
Subsec. (b)(2), (3).
Subsec. (d).
Subsec. (d)(1).
Subsec. (d)(1)(C).
Subsec. (d)(1)(F)(i).
Subsec. (d)(1)(G).
Subsec. (d)(1)(H).
Subsec. (d)(1)(H)(vi).
Subsec. (d)(3).
Subsec. (d)(5).
Subsec. (d)(6).
Subsec. (d)(7).
Subsec. (e).
Subsec. (f)(3).
Subsec. (f)(8).
Subsec. (f)(9) to (11).
Subsec. (g).
Subsec. (h).
2020—Subsec. (g)(3)(E)(ii).
2019—Subsec. (g)(3)(E)(ii).
2018—Subsec. (g)(3)(E)(ii).
2015—Subsec. (g)(3)(E).
2014—Subsec. (f)(1), (2).
Subsec. (f)(3).
2013—Subsec. (c)(2).
Subsec. (f)(2).
Subsec. (f)(7).
Subsec. (g).
2010—Subsec. (c)(2)(B)(ii).
2009—
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment; Transition Rule
"(1)
"(2)
"(3)
"(4)
"(5)
"(1) after December 31, 2021, and before the date of enactment of this Act [Aug. 16, 2022], purchased, or entered into a written binding contract to purchase, a new qualified plug-in electric drive motor vehicle (as defined in section 30D(d)(1) of the Internal Revenue Code of 1986, as in effect on the day before the date of enactment of this Act), and
"(2) placed such vehicle in service on or after the date of enactment of this Act,
such taxpayer may elect (at such time, and in such form and manner, as the Secretary of the Treasury, or the Secretary's delegate, may prescribe) to treat such vehicle as having been placed in service on the day before the date of enactment of this Act."
Effective Date of 2020 Amendment
Effective Date of 2019 Amendment
Effective Date of 2018 Amendment
Effective Date of 2015 Amendment
Effective Date of 2014 Amendment
Amendment by
Effective Date of 2013 Amendment
Amendment by section 104(c)(2)(I) of
Effective and Termination Dates of 2010 Amendment
Amendment by
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date
Section applicable to taxable years beginning after Dec. 31, 2008, see section 205(e) of
Gross-Up of Direct Spending
Subpart C—Refundable Credits
Editorial Notes
Amendments
2014—
2010—
2009—
2008—
2002—
1984—
§31. Tax withheld on wages
(a) Wage withholding for income tax purposes
(1) In general
The amount withheld as tax under
(2) Year of credit
The amount so withheld during any calendar year shall be allowed as a credit for the taxable year beginning in such calendar year. If more than one taxable year begins in a calendar year, such amount shall be allowed as a credit for the last taxable year so beginning.
(b) Credit for special refunds of social security tax
(1) In general
The Secretary may prescribe regulations providing for the crediting against the tax imposed by this subtitle of the amount determined by the taxpayer or the Secretary to be allowable under section 6413(c) as a special refund of tax imposed on wages. The amount allowed as a credit under such regulations shall, for purposes of this subtitle, be considered an amount withheld at source as tax under section 3402.
(2) Year of credit
Any amount to which paragraph (1) applies shall be allowed as a credit for the taxable year beginning in the calendar year during which the wages were received. If more than one taxable year begins in the calendar year, such amount shall be allowed as a credit for the last taxable year so beginning.
(c) Special rule for backup withholding
Any credit allowed by subsection (a) for any amount withheld under section 3406 shall be allowed for the taxable year of the recipient of the income in which the income is received.
(Aug. 16, 1954, ch. 736,
Editorial Notes
Amendments
1984—Subsec. (a)(1).
1983—
1982—
1976—Subsec. (b)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 1984 Amendment
Effective Date of 1983 Amendment
"(a)
"(b)
"(c)
Construction of Amendment by Title VII of Division A of Pub. L. 98–369
§32. Earned income
(a) Allowance of credit
(1) In general
In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the credit percentage of so much of the taxpayer's earned income for the taxable year as does not exceed the earned income amount.
(2) Limitation
The amount of the credit allowable to a taxpayer under paragraph (1) for any taxable year shall not exceed the excess (if any) of—
(A) the credit percentage of the earned income amount, over
(B) the phaseout percentage of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds the phaseout amount.
(b) Percentages and amounts
For purposes of subsection (a)—
(1) Percentages
The credit percentage and the phaseout percentage shall be determined as follows:
| In the case of an eligible individual with: | The credit percentage is: | The phaseout percentage is: |
|---|---|---|
| 1 qualifying child | 34 | 15.98 |
| 2 qualifying children | 40 | 21.06 |
| 3 or more qualifying children | 45 | 21.06 |
| No qualifying children | 7.65 | 7.65 |
(2) Amounts
(A) In general
Subject to subparagraph (B), the earned income amount and the phaseout amount shall be determined as follows:
| In the case of an eligible individual with: | The earned income amount is: | The phaseout amount is: |
|---|---|---|
| 1 qualifying child | $6,330 | $11,610 |
| 2 or more qualifying children | $8,890 | $11,610 |
| No qualifying children | $4,220 | $5,280 |
(B) Joint returns
In the case of a joint return filed by an eligible individual and such individual's spouse, the phaseout amount determined under subparagraph (A) shall be increased by $5,000.
(c) Definitions and special rules
For purposes of this section—
(1) Eligible individual
(A) In general
The term "eligible individual" means—
(i) any individual who has a qualifying child for the taxable year, or
(ii) any other individual who does not have a qualifying child for the taxable year, if—
(I) such individual's principal place of abode is in the United States for more than one-half of such taxable year,
(II) such individual (or, if the individual is married, either the individual or the individual's spouse) has attained age 25 but not attained age 65 before the close of the taxable year, and
(III) such individual is not a dependent for whom a deduction is allowable under section 151 to another taxpayer for any taxable year beginning in the same calendar year as such taxable year.
(B) Qualifying child ineligible
If an individual is the qualifying child of a taxpayer for any taxable year of such taxpayer beginning in a calendar year, such individual shall not be treated as an eligible individual for any taxable year of such individual beginning in such calendar year.
(C) Exception for individual claiming benefits under section 911
The term "eligible individual" does not include any individual who claims the benefits of section 911 (relating to citizens or residents living abroad) for the taxable year.
(D) Limitation on eligibility of nonresident aliens
The term "eligible individual" shall not include any individual who is a nonresident alien individual for any portion of the taxable year unless such individual is treated for such taxable year as a resident of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013.
(E) Identification number requirement
No credit shall be allowed under this section to an eligible individual who does not include on the return of tax for the taxable year—
(i) such individual's taxpayer identification number, and
(ii) if the individual is married, the taxpayer identification number of such individual's spouse.
(2) Earned income
(A) The term "earned income" means—
(i) wages, salaries, tips, and other employee compensation, but only if such amounts are includible in gross income for the taxable year, plus
(ii) the amount of the taxpayer's net earnings from self-employment for the taxable year (within the meaning of section 1402(a)), but such net earnings shall be determined with regard to the deduction allowed to the taxpayer by section 164(f).
(B) For purposes of subparagraph (A)—
(i) the earned income of an individual shall be computed without regard to any community property laws,
(ii) no amount received as a pension or annuity shall be taken into account,
(iii) no amount to which section 871(a) applies (relating to income of nonresident alien individuals not connected with United States business) shall be taken into account,
(iv) no amount received for services provided by an individual while the individual is an inmate at a penal institution shall be taken into account,
(v) no amount described in subparagraph (A) received for service performed in work activities as defined in paragraph (4) or (7) of section 407(d) of the Social Security Act to which the taxpayer is assigned under any State program under part A of title IV of such Act shall be taken into account, but only to the extent such amount is subsidized under such State program, and
(vi) a taxpayer may elect to treat amounts excluded from gross income by reason of section 112 as earned income.
(3) Qualifying child
(A) In general
The term "qualifying child" means a qualifying child of the taxpayer (as defined in section 152(c), determined without regard to paragraph (1)(D) thereof and section 152(e)).
(B) Married individual
The term "qualifying child" shall not include an individual who is married as of the close of the taxpayer's taxable year unless the taxpayer is entitled to a deduction under section 151 for such taxable year with respect to such individual (or would be so entitled but for section 152(e)).
(C) Place of abode
For purposes of subparagraph (A), the requirements of section 152(c)(1)(B) shall be met only if the principal place of abode is in the United States.
(D) Identification requirements
(i) In general
A qualifying child shall not be taken into account under subsection (b) unless the taxpayer includes the name, age, and TIN of the qualifying child on the return of tax for the taxable year.
(ii) Other methods
The Secretary may prescribe other methods for providing the information described in clause (i).
(4) Treatment of military personnel stationed outside the United States
For purposes of paragraphs (1)(A)(ii)(I) and (3)(C), the principal place of abode of a member of the Armed Forces of the United States shall be treated as in the United States during any period during which such member is stationed outside the United States while serving on extended active duty with the Armed Forces of the United States. For purposes of the preceding sentence, the term "extended active duty" means any period of active duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.
(d) Married individuals
(1) In general
In the case of an individual who is married, this section shall apply only if a joint return is filed for the taxable year under section 6013.
(2) Determination of marital status
For purposes of this section—
(A) In general
Except as provided in subparagraph (B), marital status shall be determined under section 7703(a).
(B) Special rule for separated spouse
An individual shall not be treated as married if such individual—
(i) is married (as determined under section 7703(a)) and does not file a joint return for the taxable year,
(ii) resides with a qualifying child of the individual for more than one-half of such taxable year, and
(iii)(I) during the last 6 months of such taxable year, does not have the same principal place of abode as the individual's spouse, or
(II) has a decree, instrument, or agreement (other than a decree of divorce) described in section 121(d)(3)(C) with respect to the individual's spouse and is not a member of the same household with the individual's spouse by the end of the taxable year.
(e) Taxable year must be full taxable year
Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.
(f) Amount of credit to be determined under tables
(1) In general
The amount of the credit allowed by this section shall be determined under tables prescribed by the Secretary.
(2) Requirements for tables
The tables prescribed under paragraph (1) shall reflect the provisions of subsections (a) and (b) and shall have income brackets of not greater than $50 each—
(A) for earned income between $0 and the amount of earned income at which the credit is phased out under subsection (b), and
(B) for adjusted gross income between the dollar amount at which the phaseout begins under subsection (b) and the amount of adjusted gross income at which the credit is phased out under subsection (b).
[(g) Repealed. Pub. L. 111–226, title II, §219(a)(2), Aug. 10, 2010, 124 Stat. 2403 ]
[(h) Repealed. Pub. L. 107–16, title III, §303(c), June 7, 2001, 115 Stat. 55 ]
(i) Denial of credit for individuals having excessive investment income
(1) In general
No credit shall be allowed under subsection (a) for the taxable year if the aggregate amount of disqualified income of the taxpayer for the taxable year exceeds $10,000.
(2) Disqualified income
For purposes of paragraph (1), the term "disqualified income" means—
(A) interest or dividends to the extent includible in gross income for the taxable year,
(B) interest received or accrued during the taxable year which is exempt from tax imposed by this chapter,
(C) the excess (if any) of—
(i) gross income from rents or royalties not derived in the ordinary course of a trade or business, over
(ii) the sum of—
(I) the deductions (other than interest) which are clearly and directly allocable to such gross income, plus
(II) interest deductions properly allocable to such gross income,
(D) the capital gain net income (as defined in section 1222) of the taxpayer for such taxable year, and
(E) the excess (if any) of—